Template-Type: ReDIF-Paper 1.0
Author-Name: Richard Chisik
Author-X-Name-First: Richard
Author-X-Name-Last: Chisik
Author-Email: rchisik@economics.ryerson.ca 
Author-Workplace-Name: Department of Economics, Ryerson University, Toronto, Canada
Author-Name: Julian Emami Namini
Author-X-Name-First:  Julian 
Author-X-Name-Last: Emami Namini 
Author-Email: emaminamini@ese.eur.nl
Author-Workplace-Name:  Erasmus University
Author-Name: 
Author-X-Name-First:    
Author-X-Name-Last: 
Author-Email: 
Author-Workplace-Name:  
Title: International Trade and Labor Market Discrimination
Abstract: We embed a competitive search model with labor market discrimination into a two-sector, two-country framework in order to analyze how labor market discrimination and international trade interact. Discrimination reduces the matching probability and output in the skill intensive differentiated-product sector so that discrimination-induced comparative advantage may overshadow technological comparative advantage in determining the pattern of trade. Trade liberalization generates a decrease in the skilled-worker wage gap in the country that is an exporter of goods from the simple sector but increases it in the country that is a net exporter of differentiated products. Trade liberalization has an opposite effect on firms. In the country that is an exporter of simple goods, trade liberalization reduces the profits of the non-discriminatory firms by more than those of the discriminatory firms.
Length: 37 pages
Creation-Date: 2015-02
Number: 043
File-URL: http://economics.ryerson.ca/workingpapers/wp043.pdf
File-Format: Application/pdf
Handle: RePEc:rye:wpaper:wp043