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Trade Shocks And Higher‐Order Earnings Risk In Local Labor Markets

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  • Tomás R. Martinez
  • Ursula Mello

Abstract

This article investigates the relationship between international trade and asymmetrical labor income risk. Using the case study of Brazil, we inspect how an increase in import penetration following the China shock impacted the distribution of idiosyncratic earnings changes across the country's local labor markets. We find that an increase in import penetration leads to a more dispersed and negatively skewed distribution. These effects can be explained by an increase in the volatility of hours worked following job and industry transitions, particularly from involuntary job separations.

Suggested Citation

  • Tomás R. Martinez & Ursula Mello, 2024. "Trade Shocks And Higher‐Order Earnings Risk In Local Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(4), pages 1717-1746, November.
    • Handle: RePEc:wly:iecrev:v:65:y:2024:i:4:p:1717-1746
    DOI: 10.1111/iere.12703
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