TY  - BOOK
AU  - Cameron,Stephen
AU  - Chaudhuri,Shubham
AU  - McLaren,John
ED  - National Bureau of Economic Research.
TI  - Trade Shocks and Labor Adjustment: Theory 
T2  - NBER working paper series
PY  - 2007///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - October 2007; Hardcopy version available to institutional subscribers
N2  - We construct a dynamic, stochastic rational expectations model of labor reallocation within a trade model that is designed so that its key parameters can be estimated for trade policy analysis. A key feature is the presence of time-varying idiosyncratic moving costs faced by workers.  As a consequence of these shocks: (i) Gross flows exceed net flows (an important feature of empirical labor movements); (ii) the economy features gradual and anticipatory adjustment to aggregate shocks; (iii) wage differentials across locations or industries can persist in the steady state; and (iv) the normative implications of policy can be very different from a model without idiosyncratic shocks, even when the aggregate behaviour of both models is similar. It is shown that the equilibrium solves a particular planner's problem, thus facilitating analytical results, econometric estimation, and simulation of the model for policy analysis
UR  - https://www.nber.org/papers/w13463
UR  - http://dx.doi.org/10.3386/w13463
ER  -