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

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  • Sébastien Jean

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.

Suggested Citation

  • Sébastien Jean, 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:504-516
    DOI: 10.1111/1467-9396.00238
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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. Ludo Cuyvers & Emmanuel Dhyne & Reth Soeng, 2010. "The effects of internationalisation on domestic labour demand by skills : Firm-level evidence for Belgium," Working Paper Research 206, National Bank of Belgium.
    3. 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 - Political Economy and Comparative Economic Systems - - Socialist 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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