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

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Sebastien Jean

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Abstract

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

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Paper provided by CEPII research center in its series Working Papers with number 2000-07.

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Date of creation: May 2000
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Handle: RePEc:cii:cepidt:2000-07

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Keywords: International trade Labour-demand elasticity Sectoral trade specialisation

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Find related papers by JEL classification:
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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References listed on IDEAS
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  1. Hélène Erkel-Rousse & Daniel Mirza, 2002. "Import price elasticities: reconsidering the evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 35(2), pages 282-306, May. [Downloadable!] (restricted)
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  2. Bernard, Andrew B. & Jensen, J. Bradford, 1997. "Exporters, skill upgrading, and the wage gap," Journal of International Economics, Elsevier, vol. 42(1-2), pages 3-31, February. [Downloadable!] (restricted)
    Other versions:
  3. 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, vol. 15(3), pages 485-500, September. [Downloadable!] (restricted)
  4. Dominique Pianelli & Georges Sokoloff, 1999. "Groupe d'echanges et de reflexion sur la Caspienne," Working Papers 1999-15, CEPII research center. [Downloadable!]
  5. 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, vol. 109(2), pages 367-97, May. [Downloadable!] (restricted)
  6. Donald R. Davis, 1996. "Does European Unemployment Prop Up American Wages?," Harvard Institute of Economic Research Working Papers 1752, Harvard - Institute of Economic Research.
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  7. 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 2033, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  1. 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," CESPRI Working Papers 153, CESPRI, Centre for Research on Innovation and Internationalisation, Universita' Bocconi, Milano, Italy, revised Feb 2004. [Downloadable!]
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