Some Simple Analytics of Trade and Labor Mobility
This paper studies a simple, tractable model of labor adjustment in a trade model that allows researchers to analyze the economy's dynamic response to trade liberalization. Since it is a neoclassical market-clearing model, duality techniques c...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank Group, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2014/11/20349473/some-simple-analytics-trade-labor-mobility http://hdl.handle.net/10986/20627 |
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okr-10986-206272021-04-23T14:03:59Z Some Simple Analytics of Trade and Labor Mobility Artuc, Erhan Chaudhuri, Shubham McLaren, John ADJUSTMENT ASSISTANCE ADJUSTMENT COST ADJUSTMENT COSTS ADJUSTMENT PROCESS AFFECTED WORKERS AVERAGE WAGES BENCHMARK CETERIS PARIBUS COMPENSATING WAGE DIFFERENTIALS CONSUMER PRICE INDEX DEMAND CURVES DEVELOPING COUNTRIES DEVELOPMENT POLICY DISCOUNTED VALUE DISTRIBUTION OF INCOME DOMESTIC PRICE DOWNWARD PRESSURE ECONOMIC ACTIVITY ECONOMIC INEQUALITY ECONOMIC THEORY ECONOMICS ELASTICITY ELASTICITY OF LABOR SUPPLY ELASTICITY OF SUBSTITUTION EMPLOYMENT EFFECTS EMPLOYMENT LEVELS EMPLOYMENT RESEARCH EQUILIBRIUM EQUILIBRIUM UNEMPLOYMENT EXPECTED VALUE EXPECTED WAGE EXPORT MARKETS EXPORT SECTOR EXPORT SUBSIDY EXPORTS FEDERAL RESERVE SYSTEM FREE TRADE FREE TRADE AGREEMENT GDP GENERAL EQUILIBRIUM GLOBALIZATION HIGH WAGES HUMAN CAPITAL IMPORT COMPETITION IMPORTS INDUSTRY WAGE INTERNATIONAL ECONOMICS INTERNATIONAL TRADE JOB SEPARATION JOBS LABOR ADJUSTMENT LABOR ALLOCATION LABOR ALLOCATIONS LABOR DEMAND LABOR FORCE LABOR MARKET LABOR MARKET RIGIDITIES LABOR MARKETS LABOR MOBILITY LABOR REALLOCATION LABOR SUPPLIES LABOUR LOCAL LABOR MARKET LOCAL LABOR MARKETS MANUFACTURING INDUSTRIES MANUFACTURING WAGE MANUFACTURING WAGES MARGINAL COST MARGINAL PRODUCTS MARGINAL VALUE NATIONAL INCOME NEOCLASSICAL MODELS OCCUPATION OCCUPATIONAL MOBILITY OPEN ECONOMY OPTIMAL ALLOCATION OPTIMIZATION POLITICAL ECONOMY POLITICAL ECONOMY OF TRADE PREFERENTIAL AGREEMENT PRESENT VALUE PRODUCT PRICES PRODUCTION FUNCTION PRODUCTION FUNCTIONS PROTECTIONISM REAL WAGE REAL WAGES RENTS RISK NEUTRAL TARIFF BINDINGS TARIFF PROTECTION TARIFF REDUCTION TARIFF REDUCTIONS TERMS OF TRADE TRADE ADJUSTMENT TRADE ADJUSTMENT ASSISTANCE TRADE BLOCK TRADE BLOCKS TRADE DIVERSION TRADE LIBERALIZATION TRADE MODEL TRADE MODELS TRADE POLICY TRADE REGIME TRAINING COSTS UNEMPLOYMENT URUGUAY ROUND WAGE DIFFERENTIAL WAGE DIFFERENTIALS WAGE EFFECTS WAGE INCREASE WAGE INEQUALITY WAGE LEVELS WAGE LOSS WAGES WORKER WORKERS WTO This paper studies a simple, tractable model of labor adjustment in a trade model that allows researchers to analyze the economy's dynamic response to trade liberalization. Since it is a neoclassical market-clearing model, duality techniques can be employed to study the equilibrium and, despite its simplicity, a rich variety of properties emerge. The model generates gross flows of labor across industries, even in the steady state; persistent wage differentials across industries; gradual adjustment to a liberalization; and anticipatory adjustment to a pre-announced liberalization. Pre-announcement induces anticipatory flight from the liberalizing sector, driving up wages there temporarily and giving workers remaining there what this paper calls "anticipation rents." By this process, pre-announcement makes liberalization less attractive to export-sector workers and more attractive to import-sector workers, eventually making workers unanimous either in favor of or in opposition to liberalization. Based on these results, the paper identifies many pitfalls to conventional methods of empirical study of trade liberalization that are based on static models. 2014-12-03T19:43:59Z 2014-12-03T19:43:59Z 2014-11 http://documents.worldbank.org/curated/en/2014/11/20349473/some-simple-analytics-trade-labor-mobility http://hdl.handle.net/10986/20627 English en_US Policy Research Working Paper;No. 7089 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Group, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ADJUSTMENT ASSISTANCE ADJUSTMENT COST ADJUSTMENT COSTS ADJUSTMENT PROCESS AFFECTED WORKERS AVERAGE WAGES BENCHMARK CETERIS PARIBUS COMPENSATING WAGE DIFFERENTIALS CONSUMER PRICE INDEX DEMAND CURVES DEVELOPING COUNTRIES DEVELOPMENT POLICY DISCOUNTED VALUE DISTRIBUTION OF INCOME DOMESTIC PRICE DOWNWARD PRESSURE ECONOMIC ACTIVITY ECONOMIC INEQUALITY ECONOMIC THEORY ECONOMICS ELASTICITY ELASTICITY OF LABOR SUPPLY ELASTICITY OF SUBSTITUTION EMPLOYMENT EFFECTS EMPLOYMENT LEVELS EMPLOYMENT RESEARCH EQUILIBRIUM EQUILIBRIUM UNEMPLOYMENT EXPECTED VALUE EXPECTED WAGE EXPORT MARKETS EXPORT SECTOR EXPORT SUBSIDY EXPORTS FEDERAL RESERVE SYSTEM FREE TRADE FREE TRADE AGREEMENT GDP GENERAL EQUILIBRIUM GLOBALIZATION HIGH WAGES HUMAN CAPITAL IMPORT COMPETITION IMPORTS INDUSTRY WAGE INTERNATIONAL ECONOMICS INTERNATIONAL TRADE JOB SEPARATION JOBS LABOR ADJUSTMENT LABOR ALLOCATION LABOR ALLOCATIONS LABOR DEMAND LABOR FORCE LABOR MARKET LABOR MARKET RIGIDITIES LABOR MARKETS LABOR MOBILITY LABOR REALLOCATION LABOR SUPPLIES LABOUR LOCAL LABOR MARKET LOCAL LABOR MARKETS MANUFACTURING INDUSTRIES MANUFACTURING WAGE MANUFACTURING WAGES MARGINAL COST MARGINAL PRODUCTS MARGINAL VALUE NATIONAL INCOME NEOCLASSICAL MODELS OCCUPATION OCCUPATIONAL MOBILITY OPEN ECONOMY OPTIMAL ALLOCATION OPTIMIZATION POLITICAL ECONOMY POLITICAL ECONOMY OF TRADE PREFERENTIAL AGREEMENT PRESENT VALUE PRODUCT PRICES PRODUCTION FUNCTION PRODUCTION FUNCTIONS PROTECTIONISM REAL WAGE REAL WAGES RENTS RISK NEUTRAL TARIFF BINDINGS TARIFF PROTECTION TARIFF REDUCTION TARIFF REDUCTIONS TERMS OF TRADE TRADE ADJUSTMENT TRADE ADJUSTMENT ASSISTANCE TRADE BLOCK TRADE BLOCKS TRADE DIVERSION TRADE LIBERALIZATION TRADE MODEL TRADE MODELS TRADE POLICY TRADE REGIME TRAINING COSTS UNEMPLOYMENT URUGUAY ROUND WAGE DIFFERENTIAL WAGE DIFFERENTIALS WAGE EFFECTS WAGE INCREASE WAGE INEQUALITY WAGE LEVELS WAGE LOSS WAGES WORKER WORKERS WTO |
| spellingShingle |
ADJUSTMENT ASSISTANCE ADJUSTMENT COST ADJUSTMENT COSTS ADJUSTMENT PROCESS AFFECTED WORKERS AVERAGE WAGES BENCHMARK CETERIS PARIBUS COMPENSATING WAGE DIFFERENTIALS CONSUMER PRICE INDEX DEMAND CURVES DEVELOPING COUNTRIES DEVELOPMENT POLICY DISCOUNTED VALUE DISTRIBUTION OF INCOME DOMESTIC PRICE DOWNWARD PRESSURE ECONOMIC ACTIVITY ECONOMIC INEQUALITY ECONOMIC THEORY ECONOMICS ELASTICITY ELASTICITY OF LABOR SUPPLY ELASTICITY OF SUBSTITUTION EMPLOYMENT EFFECTS EMPLOYMENT LEVELS EMPLOYMENT RESEARCH EQUILIBRIUM EQUILIBRIUM UNEMPLOYMENT EXPECTED VALUE EXPECTED WAGE EXPORT MARKETS EXPORT SECTOR EXPORT SUBSIDY EXPORTS FEDERAL RESERVE SYSTEM FREE TRADE FREE TRADE AGREEMENT GDP GENERAL EQUILIBRIUM GLOBALIZATION HIGH WAGES HUMAN CAPITAL IMPORT COMPETITION IMPORTS INDUSTRY WAGE INTERNATIONAL ECONOMICS INTERNATIONAL TRADE JOB SEPARATION JOBS LABOR ADJUSTMENT LABOR ALLOCATION LABOR ALLOCATIONS LABOR DEMAND LABOR FORCE LABOR MARKET LABOR MARKET RIGIDITIES LABOR MARKETS LABOR MOBILITY LABOR REALLOCATION LABOR SUPPLIES LABOUR LOCAL LABOR MARKET LOCAL LABOR MARKETS MANUFACTURING INDUSTRIES MANUFACTURING WAGE MANUFACTURING WAGES MARGINAL COST MARGINAL PRODUCTS MARGINAL VALUE NATIONAL INCOME NEOCLASSICAL MODELS OCCUPATION OCCUPATIONAL MOBILITY OPEN ECONOMY OPTIMAL ALLOCATION OPTIMIZATION POLITICAL ECONOMY POLITICAL ECONOMY OF TRADE PREFERENTIAL AGREEMENT PRESENT VALUE PRODUCT PRICES PRODUCTION FUNCTION PRODUCTION FUNCTIONS PROTECTIONISM REAL WAGE REAL WAGES RENTS RISK NEUTRAL TARIFF BINDINGS TARIFF PROTECTION TARIFF REDUCTION TARIFF REDUCTIONS TERMS OF TRADE TRADE ADJUSTMENT TRADE ADJUSTMENT ASSISTANCE TRADE BLOCK TRADE BLOCKS TRADE DIVERSION TRADE LIBERALIZATION TRADE MODEL TRADE MODELS TRADE POLICY TRADE REGIME TRAINING COSTS UNEMPLOYMENT URUGUAY ROUND WAGE DIFFERENTIAL WAGE DIFFERENTIALS WAGE EFFECTS WAGE INCREASE WAGE INEQUALITY WAGE LEVELS WAGE LOSS WAGES WORKER WORKERS WTO Artuc, Erhan Chaudhuri, Shubham McLaren, John Some Simple Analytics of Trade and Labor Mobility |
| relation |
Policy Research Working Paper;No. 7089 |
| description |
This paper studies a simple, tractable
model of labor adjustment in a trade model that allows
researchers to analyze the economy's dynamic response
to trade liberalization. Since it is a neoclassical
market-clearing model, duality techniques can be employed to
study the equilibrium and, despite its simplicity, a rich
variety of properties emerge. The model generates gross
flows of labor across industries, even in the steady state;
persistent wage differentials across industries; gradual
adjustment to a liberalization; and anticipatory adjustment
to a pre-announced liberalization. Pre-announcement induces
anticipatory flight from the liberalizing sector, driving up
wages there temporarily and giving workers remaining there
what this paper calls "anticipation rents." By
this process, pre-announcement makes liberalization less
attractive to export-sector workers and more attractive to
import-sector workers, eventually making workers unanimous
either in favor of or in opposition to liberalization. Based
on these results, the paper identifies many pitfalls to
conventional methods of empirical study of trade
liberalization that are based on static models. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Artuc, Erhan Chaudhuri, Shubham McLaren, John |
| author_facet |
Artuc, Erhan Chaudhuri, Shubham McLaren, John |
| author_sort |
Artuc, Erhan |
| title |
Some Simple Analytics of Trade and Labor Mobility |
| title_short |
Some Simple Analytics of Trade and Labor Mobility |
| title_full |
Some Simple Analytics of Trade and Labor Mobility |
| title_fullStr |
Some Simple Analytics of Trade and Labor Mobility |
| title_full_unstemmed |
Some Simple Analytics of Trade and Labor Mobility |
| title_sort |
some simple analytics of trade and labor mobility |
| publisher |
World Bank Group, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2014/11/20349473/some-simple-analytics-trade-labor-mobility http://hdl.handle.net/10986/20627 |
| _version_ |
1764446874370048000 |