How do labor market reforms affect international competitiveness and net foreign assets? To answer this question, we build a two-region RBC model with labor market frictions, idiosyncratic consumption risk, and limited cross-sectional heterogeneity to establish a direct link between labor market...

We use a novel data set on firm vacancies and job seekers from a Mexican government job placement service to analyze whether changes in matching frictions can explain the large and persistent increase in Mexican unemployment after the 2008 global financial crisis. We find evidence of a...