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We embed a competitive search model with labor market discrimination into a two-sector, two-country framework in order to analyze how labor market discrimination impacts the pattern of international trade and also how trade affects discrimination. Discrimination reduces the matching probability and output in the skilled-labor intensive differentiated-product sector so that the country with more discriminatory firms has a comparative advantage in the simple sector. As countries alter theirdoi:10.2139/ssrn.2815478 fatcat:tj4epk3tdbhcrabgawzqokiara