This paper examines the development of wage inequality in the context of a Burdett-Mortensen (1998) model that is extended to incorporate worker heterogeneity through skill requirements in the production process. In this environment, wage dispersion is a natural consequence of firms pursuing...

This paper evaluates the welfare effects of trade in a setting with risk averse workers and uncertainty in labour market outcomes. We provide conditions under which a small change in relative prices due to trade reduces welfare in both a static as well as a dynamic economy. Finally, we develop a...

This paper evaluates the welfare effects of trade in a setting with risk averse workers and uncertainty in labour market outcomes. We examine the bias introduced in welfare analysis when individuals are assumed to be risk neutral when they are in fact risk averse. We provide conditions under...