consistent with increasing inequality in every country, growth in residual wage inequality, rising unemployment, and reallocation … within and between industries. While the opening of trade yields welfare gains, unemployment and inequality within sectors … nonmonotonic effects on unemployment and inequality within sectors. As aggregate unemployment and inequality have within- and …

market frictions. We characterize the distributions of employment, unemployment, wages and income within and between sectors … as a function of structural parameters. We find that greater firm heterogeneity increases unemployment, wage inequality … frictions have non-monotonic effects on aggregate unemployment and inequality through within- and between-sector components …

labor market frictions and worker heterogeneity provides a framework for studying the impact of trade on unemployment and …