Professor Carl Davidson



Recent Developments in the Theory of Involuntary Unemployment

This monograph provides a relatively nontechnical summary of the prominent theories of unemployment that have emerged since 1960: search, disequilibrium, implicit contracts, efficiency wage, and insider/outsider models.

W.E. Upjohn Institute for Employment Research, 1990.


Search Theory and Unemployment

This book contains nine chapters that survey and extend the theory of job search and its application to the problem of unemployment. The volume ranges from surveys of job search theory that take microeconomic and macroeconomic perspectives to original theoretical contributions which focus on the externalities arising from non-sequential search and search under imperfect information. It includes a survey of econometric methods that have been developed to estimate models of job search, as well as two contributions to the empirical search literature. Finally, it includes a study that reviews and extends the literature on optimal unemployment insurance and concludes with an appraisal of the influence of search theory on the thinking of macroeconomic policymakers.

Kluwer Academic Publishers, 2002

Jointly edited with Stephen Woodbury


International Trade and the Labor Market: Theory, Evidence and Policy Implications

During the past two decades, the economic fortunes of less-skilled workers in the United States and Europe have sunk at a time when there has been a boom in international trade. This has sparked considerable debate among those interested in trade policy and labor markets over the impact of trade on labor-market outcomes, and in particular, the impact of globalization on low-skill, low-wage workers.  In this monograph, we tackle these questions by extending the traditional analysis of international trade to allow for labor markets characterized by workers whose labor-market experiences are punctuated by spells of involuntary unemployment. We demonstrate that such extensions are easily accomplished and that they provide valuable new insights that withstand empirical scrutiny. And perhaps most importantly, we argue that such models offer the appropriate venue in which to carry out policy analysis aimed at determining the best way to compensate those who suffer economic loss as a result of changing trade patterns.

W.E. Upjohn Institute for Employment Research, 2004

Joint Steve Matusz


International Trade with Equilibrium Unemployment
While most standard economic models of international trade assume full employment, we have argued that this reliance on full-employment modeling is misleading and ill-equipped to tackle many important trade-related questions. This book brings together our work in creating models that more accurately reflect the real-world connections between international trade and labor markets.  The material collected here presents the theoretical and empirical foundations of equilibrium unemployment modeling, intended to give researchers and policymakers a more realistic picture of how international trade affects labor markets, and of how transnational differences in labor markets affect international trade. We address the shortcomings of standard models, describe the empirics that underlie equilibrium unemployment models, and illustrate how these new models can yield vital insights into the relationship between international trade and employment. This book also includes a general introduction as well as section introductions designed to put our work in context and reveal the thinking behind our ideas.

Princeton University Press, 2010

Joint with Steve Matusz