Working papers:
Delay and dynamics in labor market adjustment: Simulation results
Erhan Artuc; Shubham Chaudhuri; John McLaren
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- Title:
- Delay and dynamics in labor market adjustment: Simulation results
- Author(s):
-
Artuc, Erhan
Chaudhuri, Shubham
McLaren, John - Date:
- 2003
- Type:
- Working papers
- Department:
- Economics
- Permanent URL:
- http://hdl.handle.net/10022/AC:P:496
- Series:
- Department of Economics Discussion Papers
- Part Number:
- 0304-07
- Publisher:
- Department of Economics, Columbia University
- Publisher Location:
- New York
- Abstract:
- We study numerical simulations of a standard trade model with labor mobility costs added, modeled in such a way as to generate gross flows in excess of net flows. We find that adjustment to a trade shock can take a long time with plausible values of parameter values. In our base case, for the economy to move 95% of the distance to the new steady state takes well over a decade. Gross flows have a large effect on this rate of adjustment and on the normative effects of trade. Announcing and delaying the liberalization can build a constituency for free trade, but it can also destroy one. We study the conditions under which these two different outcomes occur.
- Subject(s):
- Economics, Labor
- Item views:
- 197