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Full-Text Articles in Industrial Organization
Comparative Advantage And The Equilibrium Rate Of Unemployment, Hian Teck Hoon
Comparative Advantage And The Equilibrium Rate Of Unemployment, Hian Teck Hoon
Research Collection School Of Economics
This paper develops a two-country Heckscher-Ohlin model with endogenous equilibrium involuntary unemployment to examine the question: What is the effect of free trade on the equilibrium rates of unemployment in the labor abundant and labor-scarce countries? It is shown that free trade leads to a decline in the equilibrium rate of unemployment in the labor-abundant country but to a rise in unemployment in the labor-scarce country.