EconPapers    
Economics at your fingertips  
 

Trade Liberalisation and Human Capital Adjustment

Rodney Falvey (), Sir David Greenaway () and Joana Silva ()

Discussion Papers from University of Nottingham, GEP

Abstract: This paper highlights the way in which workers of different age and ability are affected by anticipated and unanticipated trade liberalisations. A two-factor (skilled and unskilled labour), two-sector Heckscher-Ohlin model is supplemented with an education sector which uses skilled labour and time to convert unskilled into skilled workers. A skilled worker’s income depends on ability, but all unskilled workers have the same income. Trade liberalisation in an abundant country increases the relative wage and induces skill upgrading by existing workforce. Younger and more able workers are most likely to upgrade, but not all are better off after liberalisation: Older and less able upgraders are likely to lose. For an anticipated liberalisation the preferred upgrading strategies depend on ability and much of the upgrading takes place before liberalisation. This implies that some workers who would have upgraded had they anticipated the liberalisation will not do so if it is unanticipated, and post-liberalisation adjustment assistance will fail to compensate some losers and distort the upgrading decisions of others.

Keywords: International trade; Factor mobility; Labour market adjustment (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
https://www.nottingham.ac.uk/gep/documents/papers/2007/07-34.pdf (application/pdf)

Related works:
Journal Article: Trade liberalisation and human capital adjustment (2010) Downloads
Working Paper: Trade Liberalisation and Human Capital Adjustment (2010) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:not:notgep:07/34

Access Statistics for this paper

More papers in Discussion Papers from University of Nottingham, GEP School of Economics University of Nottingham University Park Nottingham NG7 2RD. Contact information at EDIRC.
Bibliographic data for series maintained by Hilary Hughes ().

 
Page updated 2020-01-24
Handle: RePEc:not:notgep:07/34