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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.

Suggested Citation

  • Jean, Sebastien, 2000. "The Effect of International Trade on Labor-Demand Elasticities: Intersectoral Matters," Review of International Economics, Wiley Blackwell, vol. 8(3), pages 504-516, August.
  • Handle: RePEc:bla:reviec:v:8:y:2000:i:3:p:504-16
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    References listed on IDEAS

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    1. 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.
    2. Dominique Pianelli & Georges Sokoloff, 1999. "Groupe d'Échanges et de Réflexion sur la Caspienne," Working Papers 1999-15, CEPII research center.
    3. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 367-397.
    4. Donald R. Davis, 1996. "Does European Unemployment Prop up American Wages?," NBER Working Papers 5620, National Bureau of Economic Research, Inc.
    5. 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.
    6. Matthew J. Slaughter, 1997. "International Trade and Labor-Demand Elasticities," NBER Working Papers 6262, National Bureau of Economic Research, Inc.
    7. 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.
    8. 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.
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    Cited by:

    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," KITeS Working Papers 153, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Feb 2004.
    2. Lionel Fontagné & Daniel Mirza, 2001. "International Trade and Rent Sharing in Developed and Developing countries," Working Papers 2001-09, CEPII research center.

    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F10 - International Economics - - Trade - - - General
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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