TDPE presents: Entrepreneurs, Jobs, and Trade

TDPE presents: Entrepreneurs, Jobs and Trade

Speaker: Bulent Unel (Louisiana State University) 

Authors: Elias Dinopoulos and Bulent Unel

The authors propose a simple theory of endogenous firm productivity, unemployment, and personal income distribution. High-talented individuals choose to become self-employed entrepreneurs and acquire more managerial (human) capital; whereas low-talented individuals become workers and face the prospect of equilibrium unemployment. In the North-South global economy, a move from autarky to free trade raises firm-level productivity, reduces unemployment, raises inequality, and may reduce welfare in the North; whereas trade openness reduces firm productivity, increases unemployment, lowers inequality, and raises welfare in the South. Unilateral job-creating policies implemented by North have "begger-thy neighbor" elements: while they increase welfare in both countries, they reduce Northern unemployment and raise Southern unemployment; increase the North-South gap in per-capita income and raise the North-South gap in the supply of entrepreneurs.

Open to the Public

Sponsored by the Trade, Development and Political Economy Program in the Moynihan Institute of Global Affairs