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Assessing the Impact of Trade Policy on Labour Markets and Production


  • Joseph F. Francois


This paper discusses the measurement of production and employment effects of trade policy, and more broadly the effects of economic integration and globalization. First, it provides a broad-brush overview of the ex-post literature linking trade to performance, such as measures of worker displacement, adjustment costs, and econometric evidence on trade and wages. It then defines structural impact indexes, illustrating their use with a stylized CGE model-based assessment of the impact of EU enlargement on the transition economies. Finally, the last section discusses the gap between our ex-post experience with adjustment costs, and what ex-ante methods actually tell us.

Suggested Citation

  • Joseph F. Francois, 2004. "Assessing the Impact of Trade Policy on Labour Markets and Production," Economie Internationale, CEPII research center, issue 99, pages 27-47.
  • Handle: RePEc:cii:cepiei:2004-3qb

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    References listed on IDEAS

    1. Baldwin, Robert E. & Mutti, John H. & Richardson, J. David, 1980. "Welfare effects on the United States of a significant multilateral tariff reduction," Journal of International Economics, Elsevier, vol. 10(3), pages 405-423, August.
    2. 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.
    3. Ricahrd E. Baldwin & Joseph F. Francois & Richard Portes, 1997. "The costs and benefits of eastern enlargement: the impact on the EU and central Europe," Economic Policy, CEPR;CES;MSH, vol. 12(24), pages 125-176, April.
    4. Wood, Adrian, 1997. "Openness and Wage Inequality in Developing Countries: The Latin American Challenge to East Asian Conventional Wisdom," World Bank Economic Review, World Bank Group, vol. 11(1), pages 33-57, January.
    5. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 857-880.
    6. Joseph F. Francois & Douglas Nelson, 2002. "A Geometry Of Specialisation," Economic Journal, Royal Economic Society, vol. 112(481), pages 649-678, July.
    7. Mutti, John H, 1978. "Aspects of Unilateral Trade Policy and Factor Adjustment Costs," The Review of Economics and Statistics, MIT Press, vol. 60(1), pages 102-110, February.
    8. Bale, Malcolm D., 1976. "Estimates of trade-displacement costs for U.S. workers," Journal of International Economics, Elsevier, vol. 6(3), pages 245-250, August.
    9. Goldberg, Pinelopi Koujianou & Pavcnik, Nina, 2005. "Trade, wages, and the political economy of trade protection: evidence from the Colombian trade reforms," Journal of International Economics, Elsevier, vol. 66(1), pages 75-105, May.
    10. Takacs, Wendy E & Winters, L Alan, 1991. "Labour Adjustment Costs and British Footwear Protection," Oxford Economic Papers, Oxford University Press, vol. 43(3), pages 479-501, July.
    11. James R. Markusen, 1988. "Production, Trade, and Migration with Differentiated, Skilled Workers," Canadian Journal of Economics, Canadian Economics Association, vol. 21(3), pages 492-506, August.
    12. F. R. Casas, 1984. "Imperfect Factor Mobility: A Generalization and Synthesis of Two-Sector Models of International Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 17(4), pages 747-761, November.
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    More about this item


    Adjustment Costs; Labour Displacement; Output Effects of Trade Liberalization;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation


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