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The Effect of International Trade on Labor-Demand Elasticities: Intersectoral Matters

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  • Jean, Sebastien

Abstract

This paper studies the impact of trade on the price-elasticity of aggregate labor demand, based on the idea that a variation in the cost of (a given type of) labor has an effect on the sectoral trade specialization of an economy, at the expense of the domestic productions using this factor intensively, even when the trade balance is kept unchanged. As this effect is more important the more open the economy, trade openness induces an increase in the associated labor-demand elasticity, at least if the country has a comparative disadvantage in the industries using intensively the type of labor considered. This argument is illustrated by a simple model, based on an Armington hypothesis, with an empirical assessment for France. Copyright 2000 by Blackwell Publishing Ltd.

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Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 8 (2000)
Issue (Month): 3 (August)
Pages: 504-16

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Handle: RePEc:bla:reviec:v:8:y:2000:i:3:p:504-16

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  1. Bernard, A.B. & Jensen, J.B., 1994. "Exporters, Skill Upgrading, and the Wage Gap," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 94-30, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Helene Erkel-Rousse & Daniel Mirza, 2000. "Import Price-Elastcities: Reconsidering the Evidence," Econometric Society World Congress 2000 Contributed Papers, Econometric Society 0909, Econometric Society.
  3. Faini, Riccardo & Falzoni, Anna M & Galeotti, Marzio & Helg, Rodolfo & Turrini, Alessandro Antonio, 1998. "Importing Jobs or Exporting Firms? A Close Look at the Labour Market Implications of Italy's Trade and Foreign Direct Investment Flows," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2033, C.E.P.R. Discussion Papers.
  4. Dominique Pianelli & Georges Sokoloff, 1999. "Groupe d'Échanges et de Réflexion sur la Caspienne," Working Papers 1999-15, CEPII research center.
  5. Matthew J. Slaughter, 1997. "International Trade and Labor-Demand Elasticities," NBER Working Papers 6262, National Bureau of Economic Research, Inc.
  6. Greenaway, David & Hine, Robert C. & Wright, Peter, 1999. "An empirical assessment of the impact of trade on employment in the United Kingdom," European Journal of Political Economy, Elsevier, Elsevier, vol. 15(3), pages 485-500, September.
  7. Berman, Eli & Bound, John & Griliches, Zvi, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 109(2), pages 367-97, May.
  8. Donald R. Davis, 1996. "Does European Unemployment Prop Up American Wages?," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1752, Harvard - Institute of Economic Research.
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Cited by:
  1. Lionel Fontagné & Daniel Mirza, 2001. "International Trade and Rent Sharing in Developed and Developing countries," Working Papers 2001-09, CEPII research center.
  2. Giovanni S.F. Bruno & Anna M. Falzoni & Rodolfo Helg, 2004. "Measuring the effect of globalization on labour demand elasticity: An empirical application to OECD countries," KITeS Working Papers, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy 153, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Feb 2004.

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