Trade, Jobs, and Worker Welfare

Erhan Artuc, Eunhee Lee and Paulo Bastos
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Eunhee Lee: University of Maryland

No 1282, 2019 Meeting Papers from Society for Economic Dynamics

Abstract: This paper introduces a new framework to quantify the effect of international trade on worker's welfare through labor mobility. Our framework features various determinants of labor mobility and identifies how trade shocks impact those determinants endogenously. Focusing on wage and the number of jobs as two key determinants of labor mobility, we build a structural model of labor mobility where international trade affects not only wage but also the number of job opportunities. We then combine the local labor market approach to estimate the key structural parameters of our model. Our model delivers a sufficient statistic of change in worker's welfare, which can be easily estimated using a Bartik-type instrument. We find that the welfare of a median formal sector worker increases by 16%, wages increase by 5%, and employment increases by 5% due to increase in export from 2003 to 2012.

Date: 2019
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Working Paper: Trade, Jobs, and Worker Welfare (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed019:1282

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