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Labor market consequences of trade openness and competition in foreign markets

Author

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  • Chiquiar, Daniel
  • Covarrubias, Enrique
  • Salcedo, Alejandrina

Abstract

We analyze the labor market consequences of international trade, using the evidence provided by the behavior of Mexican labor markets after the introduction of NAFTA in the nineties and the accession of China to the WTO in 2001. Following an approach close to that proposed by Autor, Dorn and Hanson (2013), we use the local market variation on exposure to international markets to identify the effects of these events. We show that changes in market access and in competition in foreign markets that Mexico has faced have had a significant impact on unemployment, employment, and wages. In particular, NAFTA integration seems to have boosted manufacturing employment and overall wages, while enhanced Chinese competition tended to have the opposite effect. Additionally, we find that the labor market responses to international trade are heterogeneous across regions in the country, being significantly stronger in the regions closer to the US border.

Suggested Citation

  • Chiquiar, Daniel & Covarrubias, Enrique & Salcedo, Alejandrina, 2016. "Labor market consequences of trade openness and competition in foreign markets," Conference papers 332760, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332760
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    References listed on IDEAS

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    1. Venables, Anthony J. & Limao, Nuno, 2002. "Geographical disadvantage: a Heckscher-Ohlin-von Thunen model of international specialisation," Journal of International Economics, Elsevier, vol. 58(2), pages 239-263, December.
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    More about this item

    Keywords

    Labor and Human Capital;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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