Globalization, Trade Imbalances, and Labor Market Adjustment

Rafael Dix-Carneiro, Ricardo Reyes-Heroles and Sharon Traiberman

No 890, 2018 Meeting Papers from Society for Economic Dynamics

Abstract: Why should we care about trade deficits? According to prominent theories of trade imbalances, trade deficits are a mechanism through which nations insure against negative shocks and smooth consumption over time; indeed, in these models the deficit has no bearing on the actual implications of trade shocks. This research argues that in more realistic settings with slow and imperfect reallocation of resources across sectors, trade deficits can have important implications for the adjustment process in response to trade shocks (such as trade liberalization or the emergence of China as a major global player). Concretely, maintaining large trade deficits for extended periods of time can substantially prolong the pain of trade-displaced workers, magnifying the unequal effects of trade on workers. If the government's objective function penalizes inequality, this magnification effect of can have important trade policy implications.

Date: 2018
New Economics Papers: this item is included in nep-int
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2018/paper_890.pdf (application/pdf)

Related works:
Journal Article: Globalization, Trade Imbalances, and Labor Market Adjustment (2023)
Working Paper: Globalization, trade imbalances and labor market adjustment (2021)
Working Paper: Globalization, trade imbalances and labor market adjustment (2021)
Working Paper: Globalization, Trade Imbalances and Labor Market Adjustment (2021)
Working Paper: Globalization, Trade Imbalances and Labor Market Adjustment (2021)
Working Paper: Globalization, Trade Imbalances, and Labor Market Adjustment (2021)
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:red:sed018:890

Access Statistics for this paper

More papers in 2018 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().