Trade Shocks and Labor Market Adjustment

Ryan Kim and Jonathan Vogel

American Economic Review: Insights, 2021, vol. 3, issue 1, 115-30

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.

JEL-codes: F16 J22 J31 J64 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (18)

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DOI: 10.1257/aeri.20200101

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