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Assessing the Impact of Trade Policy on Labor Markets and Production

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  • Joseph Francois

    (Faculty of Economics, Erasmus Universiteit Rotterdam, and CEPR)

Abstract

This paper discusses the measurement of production and employment effects of trade policy, and more broadly the effects of economic integration and globalization. First, it provides a broad-brush overview of the ex-post literature linking trade to performance, such as measures of worker displacement, adjustment costs, and econometric evidence on trade and wages. It then defines structural impact indexes, illustrating their use with a stylized CGE model-based assessment of the impact of EU enlargement on the transition economies. Finally, the last section discusses the gap between our ex-post experience with adjustment costs, and what ex-ante methods actually tell us.

Suggested Citation

  • Joseph Francois, 2004. "Assessing the Impact of Trade Policy on Labor Markets and Production," Tinbergen Institute Discussion Papers 04-058/2, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20040058
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    File URL: https://papers.tinbergen.nl/04058.pdf
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    References listed on IDEAS

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    1. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 857-880.
    2. Joseph F. Francois & Douglas Nelson, 2002. "A Geometry Of Specialisation," Economic Journal, Royal Economic Society, vol. 112(481), pages 649-678, July.
    3. J. David Richardson, 1982. "Trade Adjustment Assistance under the United States Trade Act of 1974: An Analytical Examination and Worker Survey," NBER Chapters, in: Import Competition and Response, pages 321-368, National Bureau of Economic Research, Inc.
    4. Takacs, Wendy E & Winters, L Alan, 1991. "Labour Adjustment Costs and British Footwear Protection," Oxford Economic Papers, Oxford University Press, vol. 43(3), pages 479-501, July.
    5. Mutti, John H, 1978. "Aspects of Unilateral Trade Policy and Factor Adjustment Costs," The Review of Economics and Statistics, MIT Press, vol. 60(1), pages 102-110, February.
    6. Goldberg, Pinelopi Koujianou & Pavcnik, Nina, 2005. "Trade, wages, and the political economy of trade protection: evidence from the Colombian trade reforms," Journal of International Economics, Elsevier, vol. 66(1), pages 75-105, May.
    7. James R. Markusen, 1988. "Production, Trade, and Migration with Differentiated, Skilled Workers," Canadian Journal of Economics, Canadian Economics Association, vol. 21(3), pages 492-506, August.
    8. F. R. Casas, 1984. "Imperfect Factor Mobility: A Generalization and Synthesis of Two-Sector Models of International Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 17(4), pages 747-761, November.
    9. Markusen, James R & Venables, Anthony J, 1997. "The Role of Multinational Firms in the Wage-Gap Debate," Review of International Economics, Wiley Blackwell, vol. 5(4), pages 435-451, November.
    10. Wood, Adrian, 1997. "Openness and Wage Inequality in Developing Countries: The Latin American Challenge to East Asian Conventional Wisdom," The World Bank Economic Review, World Bank, vol. 11(1), pages 33-57, January.
    11. Francois, Joseph F., 1998. "Scale Economies And Imperfect Competition In The Gtap Model," Technical Papers 28718, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    12. Richard E. Baldwin & Joseph F. Francois & Richard Portes, 1997. "The costs and benefits of eastern enlargement: the impact on the EU and central Europe," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 12(24), pages 125-176.
    13. Baldwin, Robert E. & Mutti, John H. & Richardson, J. David, 1980. "Welfare effects on the United States of a significant multilateral tariff reduction," Journal of International Economics, Elsevier, vol. 10(3), pages 405-423, August.
    14. Greenaway, David & Hine, Robert C. & Wright, Peter, 1999. "An empirical assessment of the impact of trade on employment in the United Kingdom," European Journal of Political Economy, Elsevier, vol. 15(3), pages 485-500, September.
    15. Bale, Malcolm D., 1976. "Estimates of trade-displacement costs for U.S. workers," Journal of International Economics, Elsevier, vol. 6(3), pages 245-250, August.
    16. Barbara Dluhosch, 2000. "Industrial Location and Economic Integration," Books, Edward Elgar Publishing, number 1902.
    17. Baldwin,Richard E. & Francois,Joseph F. (ed.), 1999. "Dynamic Issues in Commercial Policy Analysis," Cambridge Books, Cambridge University Press, number 9780521641715, November.
    18. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
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    Cited by:

    1. Hoekman & Bernard & Winters, L. Alan, 2005. "Trade and employment : stylized facts and research findings," Policy Research Working Paper Series 3676, The World Bank.

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    More about this item

    Keywords

    adjustment costs; labour displacement; output effects of trade liberalization;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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