This paper extends the work in Alvarez, Buera, and Lucas (2007) to a collection of open economies linked by trade flows. We model the technology of an economy as described by a probability distribution of available costs --– in the sense of labor or other resource requirements --– for...

Individuals' time allocation decisions depend on the distribution because the productivity levels of others determine their own chances of improving their productivities through search. The time allocations of everyone in the economy in turn determine the evolution of its productivity...