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Trade, Income and Heterogeneous Labor Supply

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  • Depetris Chauvin Nicolas
  • Velasquez Agustin

Abstract

Workers in developing countries tend to spend more time at work than those in developed countries. This can be explained by preferences with prevalent income effects: as income rises, workers reduce their supply of labor hours to consume more leisure. However, not all workers benefit alike. In this study, we estimate the heterogeneous effects of trade, as a shifter of aggregate income, on workers’ labor supply by age, education, and gender. We find that all workers benefit from more leisure caused by the income boost triggered by trade. However, young and elder workers benefit significantly more than prime-age workers. In addition, following increased trade openness women and less educated workers tend to reduce their labor supply relatively more.

Suggested Citation

  • Depetris Chauvin Nicolas & Velasquez Agustin, 2023. "Trade, Income and Heterogeneous Labor Supply," Asociación Argentina de Economía Política: Working Papers 4645, Asociación Argentina de Economía Política.
  • Handle: RePEc:aep:anales:4645
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    References listed on IDEAS

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    1. Eric V. Edmonds & Nina Pavcnik & Petia Topalova, 2010. "Trade Adjustment and Human Capital Investments: Evidence from Indian Tariff Reform," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 42-75, October.
    2. Edmonds, Eric V. & Pavcnik, Nina, 2006. "International trade and child labor: Cross-country evidence," Journal of International Economics, Elsevier, vol. 68(1), pages 115-140, January.
    3. Timo Boppart & L. Rachel Ngai, 2021. "Rising inequality and trends in leisure," Journal of Economic Growth, Springer, vol. 26(2), pages 153-185, June.
    4. Dave Donaldson, 2015. "The Gains from Market Integration," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 619-647, August.
    5. Michael E. Waugh, 2010. "International Trade and Income Differences," American Economic Review, American Economic Association, vol. 100(5), pages 2093-2124, December.
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    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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