Globalisation and Turnover

There seems to be a common perception, both in the public and in the media, that increased exposure to international trade has profound implications for the rates of job creation and job destruction within an economy. The common view is summarised rather well by Paul Krugman in his 1993 AER paper ‘What Do Undergrads Need to Know About Trade?’ who wrote: One thing that both friends and foes of free trade seem to agree on is that the central issue is employment. George Bush declared the objective of his ill-starred trip to Japan to be ‘jobs, jobs, jobs’; both sides in the debate over the North American Free Trade Agreement try to make their case in terms of job creation. And an astonishing number of free-traders think that the reason protectionism is bad is that it causes depressions. (Krugman, 1993: 25) Recent survey evidence provides an indication of just how widespread such concerns are. In the United States, Scheve and Slaughter (2001a, 2001b) find that globalisation has made workers feel less secure about their labour market position. These workers seem to be concerned that increased competition from low wage countries might lead to a reduction in their wages, or, perhaps more importantly, result in them losing their jobs.