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The Theory of International Trade and Unemployment

Paul Oslington, Professor of Economics and Dean of Business, Alphacrucis College, Sydney, Australia
In this book, Paul Oslington underlines the contradiction between the prominence of job losses in political conflict over trade liberalization, and trade economists usually working with full employment models.
Extent: 168 pp
Hardback Price: $127.00 Web: $114.30
Publication Date: 2006
ISBN: 978 1 84542 927 0
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  • Economics and Finance
  • International Economics
  • Labour Economics
In this book, Paul Oslington underlines the contradiction between the prominence of job losses in political conflict over trade liberalization, and trade economists usually working with full employment models.

This book is a comprehensive treatment of the benchmark competitive trade model with unemployment. It highlights the important linkages between trade and employment, providing analytical tools for participants in debates over trade liberalization. Global economy models, and empirically important cases where factor price equalization fails are considered for the first time.

Questions addressed include:
• How do trading economies with unemployment respond to shocks such as terms of trade deteriorations, changes in labour market institutions or technological change?
• How does international migration affect employed and unemployed workers?
• How are trade patterns and volumes modified by unemployment?
• Is trade liberalisation always gainful when there is unemployment?
• How are European and American labour markets linked?
• How does the entry of newly industrializing countries into manufactured goods markets affect unemployment and wages in different parts of the world?
• What is the impact of harmonization of international labour standards on different groups in different parts of the world?

This work is a basis for much needed empirical and policy work on trade and unemployment. It will strongly appeal to researchers, students and academics with an interest in international economics and international business. Economists in government and international agencies will also find much to interest them within this book.
‘The work in this book is marked by an unusual degree of insight. It confronts standard ideas from trade theory with carefully identified features of actual labour-market institutions, and obtains striking results. The core message is that changes in trade policy – including the liberalization of trade – have important effects on unemployment. Analytically, these outcomes are driven by the idea that a floor to wages causes labour markets to behave in a very different way from what is conventionally assumed in trade theory. This book works well as a coherent whole, and the overall picture which Oslington presents has important political-economy implications. He writes in an approachable way. As a result, this work will be of value, both to those who do research in this area, and also to advanced undergraduates and graduate students.’
– David Vines, Oxford University, UK and Australian National University

‘The relation between trade and unemployment suffers from a curious neglect. Oslington remedies this gap in a book that admirably synthesizes existing research as well as advancing the frontier. Highly recommended!’
– Donald Davis, Columbia University, US
Contents: Preface 1. Introduction 2. General Model with Unemployment 3. Two-Factor-Two-Good Model with Unemployment Appendix: Comparative Static Algebra 4. Three-Factor-Two-Good Model with Unemployment Appendix: Comparative Static Algebra 5. Non-Traded Goods and Unemployment Appendix: Comparative Static Algebra 6. The Pattern and Gains from Trade 7. An Integrated Global Economy 8. Specialisation in a Global Economy 9. Conclusions Bibliography Index