Global trade boosts welfare but increases unemployment in rigid labor markets.
The article explores how trade between countries affects unemployment and economic stability. By using a model with different factors like competition and production costs, the researchers found that opening borders can lead to more stability in one country but increased unemployment in another. They also discovered that having a variety of goods to trade can reduce uncertainty in the economy but may cause fluctuations in certain situations. Overall, free trade and capital movement can improve welfare in one country but worsen unemployment in another, depending on factors like competition and labor market flexibility.