This paper develops a model of the public and private provision of liquidity and its relation to unemployment. We extend the Mortensen-Pissarides model of the labor market by adding an over-the-counter (OTC) market. Trades in the OTC market are collateralized with liquid assets, which are...

In this paper, in order to study the impact of offshoring on sectoral and economywide rates of unemployment, we construct a two sector general equilibrium model in which labor is mobile across the two sectors, and unemployment is caused by search frictions. We find that, contrary to general...

In this paper, we present two alternative models of trade and unemployment, in which unemployment is generated through a search mechanism. The basic framework of the first model is Ricardian in that the only factor of production is labor and trade is based on relative technological differences....

Fairness considerations within the firm are introduced into the determination of wages in a two factor Pissarides-style model of search unemployment to study its implications for the unemployment rates of unskilled and skilled workers in both the closed economy case and when the economy can...

This paper studies the welfare and policy implications of globalization when risk averse workers face the risk of unemployment. If the jobs performed by domestic workers can be easily substituted by imports, then globalization reduces wages and increases unemployment. In this situation, in the...

It is shown that when wages are determined through collective bargaining, there is a non-monotonic relationship between the cost of o§shoring and unemployment. Starting from a high cost of off- shoring, a decrease in the cost of o§shoring reduces unemployment first and then increases it. The...