Unemployment and Trade in Spatial Economics

Abstract

Unemployment has become a focal topic of discussion in applied economics. In this paper, we provide an integrated overview of recent theoretical studies that link unemployment problems to spatial economics. We introduce four mechanisms commonly used to consider unemployment in this field: unions, search-matching frictions, efficiency wages or fair wages, and minimum wages. We also investigate how globalization impacts labor market outcomes with different paradigms of unemployment when productivity heterogeneity is considered.