International competition, returns to skill, and labor market adjustment

Rodney Falvey, David Greenaway and Joana Silva

No 8365, Policy Research Working Paper Series from The World Bank

Abstract: Does increased import competition lead to higher returns to skill within an industry and, therefore, to greater incentives for skill acquisition? Does it also induce skill upgrading by the industry?s existing workforce? To answer these questions, this paper follows individual workers across skills/occupations, firms, and industries using a longitudinal matched employer-employee data set covering all workers and firms in Portugal over 1986-2000. To identify the effects of international competition the analysis uses two exogenous measures of changes in international competition at the industry level. The first is a quasi-natural experiment based on the strong appreciation of the Portuguese currency during 1989-1992 and preexisting differences in trade exposure across industries in a differences-in-differences estimation. The second is source-weighted real exchange rates defined at the industry level. Based on both empirical strategies, and two definitions of skill, the paper shows that international competition increases returns to skill and induces skill/occupation upgrading within industries.

Keywords: International Trade and Trade Rules; Educational Sciences; Gender and Development; Common Carriers Industry; Food&Beverage Industry; Plastics&Rubber Industry; Textiles; Apparel&Leather Industry; Pulp&Paper Industry; Construction Industry; Business Cycles and Stabilization Policies; General Manufacturing (search for similar items in EconPapers)
Date: 2018-03-13
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://documents.worldbank.org/curated/en/872841520954666920/pdf/WPS8365.pdf (application/pdf)

Related works:
Journal Article: International competition, returns to skill and labour market adjustment (2018)
Working Paper: International Competition, Returns to Skill and Labor Market Adjustment (2008)
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:wbk:wbrwps:8365

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().