Trade Policy and Wage Inequality: A Structural Analysis with Occupational and Sectoral Mobility
AbstractA number of authors have argued that a worker's occupation of employment is at least as important as the worker's industry of employment in determining whether the worker will be hurt or helped by international trade. We investigate the role of occupational mobility on the effects of trade shocks on wage inequality in a dynamic, structural econometric model of worker adjustment. Each worker in our specification can switch either industry, occupation, or both, paying a time-varying cost to do so in a rational-expectations optimizing environment. We find that the costs of switching industry and occupation are both high, and of similar magnitude, but in simulations we find that a worker's industry of employment is much more important than either the worker's occupation or skill class in determining whether or not she is harmed by a trade shock.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18503.
Date of creation: Nov 2012
Date of revision:
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Other versions of this item:
- Artuc, Erhan & McLaren, John, 2012. "Trade policy and wage inequality : a structural analysis with occupational and sectoral mobility," Policy Research Working Paper Series 6194, The World Bank.
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-11 (All new papers)
- NEP-INT-2012-11-11 (International Trade)
- NEP-LAB-2012-11-11 (Labour Economics)
- NEP-LTV-2012-11-11 (Unemployment, Inequality & Poverty)
- NEP-MAC-2012-11-11 (Macroeconomics)
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