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On the Growth Effects of North-South Trade: The Role of Labor Market Flexibility

Arnold, Lutz G.


This paper examines the impact of intensified North–South intra-industry trade from a growth theoretic perspective. It incorporates unemployment into Helpman’s [Econometrica 61 (1993) 1247] model of North–South trade. We assume that those Northern workers who lose their jobs due to imitation remain unemployed for a given (expected) length of time, so that imitation in the South causes frictional ...


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