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Trade Shocks and Labor Market Adjustment

Author

Listed:
  • Ryan Kim
  • Jonathan Vogel

Abstract

We develop a framework to analyze the impact of trade shocks on a range of labor market adjustment margins in economies with a large number of sectors and labor groups. We provide analytic results characterizing equilibria. We show that labor groups earning a greater share of wage income in sectors with relative price declines experience a relative increase in unemployment and nonparticipation and decrease in wages and welfare. Our framework provides a guide for quantitative and empirical investigations into the labor market impacts of trade shocks.

Suggested Citation

  • Ryan Kim & Jonathan Vogel, 2021. "Trade Shocks and Labor Market Adjustment," American Economic Review: Insights, American Economic Association, vol. 3(1), pages 115-130, March.
    • Handle: RePEc:aea:aerins:v:3:y:2021:i:1:p:115-30
    DOI: 10.1257/aeri.20200101
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    Citations

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    Cited by:

    1. Chang, Pao-Li & Chen, Yi-Fan & Hsu, Wen-Tai, 2022. "Labor Market Participation, Income Distribution, and Welfare Gains from Trade," Economics and Statistics Working Papers 6-2022, Singapore Management University, School of Economics.
    2. Kohl, Miriam & Richter, Philipp M., 2023. "Unilateral tax policy in the open economy," Journal of International Economics, Elsevier, vol. 145(C).
    3. Esposito, Federico & Hassan, Fadi, 2023. "Import competition, trade credit and financial frictions in general equilibrium," LSE Research Online Documents on Economics 121378, London School of Economics and Political Science, LSE Library.
    4. Karin Mayr-Dorn & Gaia Narciso & Duc Anh Dang & Hien Phan, 2023. "Trade diversion and labor market adjustment: Vietnam and the U.S.-China trade war," Trinity Economics Papers tep0923, Trinity College Dublin, Department of Economics.
    5. Federico Esposito & Fadi Hassan, 2023. "Import competition, trade credit and financial frictions in general equilibrium," CEP Discussion Papers dp1901, Centre for Economic Performance, LSE.
    6. Mina Baliamoune, 2022. "Trade and Youth Labor Market Outcomes: Empirical Evidence and Policy Implications," Research papers & Policy papers 1945, Policy Center for the New South.
    7. Piriu, Andreea Alexandra, 2021. "Trade Shocks, Job Insecurity and Individual Health," GLO Discussion Paper Series 992, Global Labor Organization (GLO).
    8. Bhagia, Div & Bryson, Carter, 2023. "Understanding the racial employment gap: The role of sectoral shifts," Labour Economics, Elsevier, vol. 84(C).

    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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