Comparative advantage and unemployment

Mark Bils; Yongsung Chang; Sun Bin Kim

doi:10.1016/j.jmoneco.2012.01.001

Comparative advantage and unemployment

Mark Bils, Yongsung Chang, Sun Bin Kim

Department of Economics

Research output: Contribution to journal › Article › peer-review

22 Citations (Scopus)

Abstract

Worker heterogeneity in productivity and labor supply is introduced into a matching model. Workers who earn high wages and work high-hours are identified as those with strong market comparative advantage-high rents from being employed. The model is calibrated to match separation, job finding, and employment in the SIPP data. The model predicts a big drop in employment for workers with weak comparative advantage during recessions. But the data show that workers with strong comparative advantage also display sizable employment fluctuations, implying that aggregate employment fluctuations are not explained by the responses of workers with small rents to employment.

Original language	English
Pages (from-to)	150-165
Number of pages	16
Journal	Journal of Monetary Economics
Volume	59
Issue number	2
DOIs	https://doi.org/10.1016/j.jmoneco.2012.01.001
Publication status	Published - 2012 Mar

Bibliographical note

Funding Information:
We thank Evgenia Dechter for her excellent research assistance. We particularly thank Mark Aguiar, Iourii Manovskii, Valerie Ramey and Richard Rogerson for their helpful suggestions. Chang gratefully acknowledges support from the WCU ( R33-10005 ) Program through the Korea Research Foundation.

All Science Journal Classification (ASJC) codes

Finance
Economics and Econometrics

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1016/j.jmoneco.2012.01.001

Cite this

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Comparative advantage and unemployment

Abstract

Bibliographical note

All Science Journal Classification (ASJC) codes

UN SDGs

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