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Trade and Labor Market: What Do We Know?

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  • Matthieu Crozet
  • Gianluca Orefice

Abstract

There is a large consensus in the economic literature suggesting the positive impact of globalization on the aggregate well-being of a country. However, a clear-cut conclusion has not been reached on winners and losers from globalization. For this reason, international trade is often accused of increasing wage inequality in both developing and developed countries. A first stream of literature focused on workers characteristics to identify winners and losers from globalization. Workers with characteristics (e.g., education levels) intensively used in import-competing sectors are likely to suffer from international trade; while workers having characteristics intensively needed in exporting sectors will gain. This is a clear-cut explanation but it does not fit the data as the reality is much more complex. Labor market shocks caused by trade openness are diffuse, and it is difficult to group those who suffer/gain into well-identified categories. The firm and the type of task in which workers are employed definitely contribute to identify winners and losers from globalization. Recent CEPII research outputs, based on detailed French firm and worker-level data, confirm that identifying who lost and who gained with globalization is a very difficult task.

Suggested Citation

  • Matthieu Crozet & Gianluca Orefice, 2017. "Trade and Labor Market: What Do We Know?," CEPII Policy Brief 2017-15, CEPII research center.
  • Handle: RePEc:cii:cepipb:2017-15
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    Cited by:

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    2. Sónia Cabral & Pedro S. Martins & João Pereira dos Santos & Mariana Tavares, 2021. "Collateral Damage? Labour Market Effects of Competing with China—at Home and Abroad," Economica, London School of Economics and Political Science, vol. 88(350), pages 570-600, April.
    3. Luca Marcolin & Mariagrazia Squicciarini, 2018. "Investing in Innovation and Skills: Thriving through Global Value Chains," Review of Economics and Institutions, Università di Perugia, vol. 9(1).
    4. Sébastien Jean & Ariell Reshef, 2017. "Why Trade, and What Would Be the Consequences of Protectionism?," CEPII Policy Brief 2017-18, CEPII research center.
    5. Michel Aglietta & Virginie Coudert, 2016. "Trump and the Dollar in the Refection of History," Working Papers hal-01671414, HAL.
    6. Budría, Santiago & Milgram Baleix, Juliette, 2020. "Offshoring, job satisfaction and job insecurity," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 14, pages 1-32.
    7. Farid Toubal, 2017. "Comment – The impact of globalisation and technology on local labour markets," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 497-498, pages 145-150.
    8. Lionel Nesta & Stefano Schiavo, 2018. "International Competition and Rent Sharing in French Manufacturing: A Firm-Level Analysis," EconPol Working Paper 19, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    9. Nolan, Brian & Richiardi, Matteo & Valenzuela, Luis, 2018. "The Drivers of Inequality in Rich Countries," MPRA Paper 89806, University Library of Munich, Germany.

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    More about this item

    Keywords

    Trade Liberalization; Job Polarization; Wage Inequality;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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