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Trade and employment : stylized facts and research findings

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  • Hoekman
  • Bernard
  • Winters, L. Alan

Abstract

The substantial literature investigating the links between trade, trade policy, and labor market outcomes-both returns to labor and employment-has generated a number of stylized facts, but many open questions remain. This paper surveys the subset of the literature focusing on trade policy and integration into the world economy. Although in the longer run trade opportunities can have a major impact in creating more productive and higher paying jobs, this literature tends to take employment as given. A common finding is that much of the shorter run impacts of trade and reforms involve reallocation of labor or wage impacts within sectors. This reflects a pattern of expansion of more productive firms-especially export-oriented or suppliers to exporters-and contraction and adjustment of less productive enterprises in sectors that become subject to greater import competition. Wage responses to trade and trade reforms are generally greater than employment impacts, but trade can only explain a small fraction of the general increase in wage inequality observed in both industrial and developing countries in recent decades. A feature of the literature survey is that the focus is almost exclusively on industries producing goods. Given the importance of service industries as a source of employment and determinants of competitiveness, the paper argues that one priority area for future research is to study the employment effects of services trade and investment reforms.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3676.

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Date of creation: 01 Aug 2005
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Handle: RePEc:wbk:wbrwps:3676

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Cited by:
  1. repec:got:cegedp:95 is not listed on IDEAS
  2. Jansen, Marion, 2006. "Services Trade Liberalization at the Regional Level: Does Southern and Eastern Africa Stand to Gain from EPA Negotiations?," CEPR Discussion Papers 5800, C.E.P.R. Discussion Papers.
  3. Pamela Coke Hamilton & Yvonne Tsikata & Emmanuel Pinto Moreira, 2009. "Accelerating Trade and Integration in the Caribbean : Policy Options for Sustained Growth, Job Creation, and Poverty Reduction," World Bank Publications, The World Bank, number 2652.
  4. Frank Butter & Jan Möhlmann & Paul Wit, 2008. "Trade and product innovations as sources for productivity increases: an empirical analysis," Journal of Productivity Analysis, Springer, vol. 30(3), pages 201-211, December.
  5. Lurweg, Maren & Westermeier, Andreas, 2010. "Jobs gained and lost through trade: The case of Germany," Center for European, Governance and Economic Development Research Discussion Papers 95, University of Goettingen, Department of Economics.
  6. P. Hiebert & I. Vansteenkiste, 2010. "International trade, technological shocks and spillovers in the labour market: a GVAR analysis of the US manufacturing sector," Applied Economics, Taylor and Francis Journals, vol. 42(24), pages 3045-3066.
  7. Philip Du Caju & François Rycx & Ilan Tojerow, 2011. "Wage Structure Effects of International Trade: Evidence from a Small Open Economy," Working Papers CEB 11-011, ULB -- Universite Libre de Bruxelles.
  8. repec:qua:journl:v:9:y:2012:i:2:p:81-97 is not listed on IDEAS
  9. Damiaan Persyn, 2008. "Trade as a Wage Disciplining Device," LICOS Discussion Papers 21008, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  10. Said, Mona & Elshennawy, Abeer, 2010. "The impact of trade liberalization on manufacturing employment and wages in Egypt 1990-2007," MPRA Paper 25759, University Library of Munich, Germany.

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