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Why Has t he Natural Rate o f Unemployment Increased over Time? IN 1970, when Robert Hall asked, "Why Is the Unemployment Rate So High at Full Employment?" the unemployment rate for adult men stood at 3.5 percent. i That rate, which had been substantially below that level throughout the late 1960s, would climb to 4.4 percent in the recession of 1971. More recently, after the longest economic expansion of the postwar period, the unemployment rate of prime-aged men in the late 1980s settled at just below 5 percent of the labor force. What changes in the American labor market led to this apparent secular increase in the natural rate of unemployment? Twenty years later, we revisit Hall's question and turn up some new answers. This paper studies the evolution of male unemployment and nonparticipation in the U.S. labor force since 1967. In looking at these developments, we have two main goals. The first is to document the substantial This research was supported by the National Science Foundation, the Sloan Foundation, and the Bradley Foundation. Topel also acknowledges support from the William Ladany Faculty Research Fund at the Graduate School of Business, University of Chicago. We acknowledge the comments of workshop participants at Chicago, the Board of Gover

PRELIMINARY AbstractRecent trade papers find that exporting firms are more productive, produce higher quality goods, and use more advanced technologies. In this paper we explore the implications of exports and technology upgrading on an under-explored aspect of wage inequality-gender inequality. We build a model with old and new technologies which require different amounts of white and blue-collar tasks. White and blue collar tasks can be performed by male or female workers.Reminiscent of Autor, Levy, and Murnane (2003) in which computers replace the need for routine physical tasks, the new technology in our model replaces the need for physically demanding skills, "brawn," and men are replaced by women in blue-collar tasks but not in white-collar tasks. Using establishment level data from Mexico, we investigate the link between tariff reductions associated with the North American Free Trade Agreement (NAFTA), exports, and demand for female workers. Consistent with the previous literature and the predictions of our model, we find that tariff reductions increased exports through the entry of new firms into the export sector. We find evidence that these newly exporting firms updated their machinery and equipment and replaced male blue-collar workers with female blue-collar workers. JEL: codes.