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International Trade and Job Polarization: Evidence at the Worker-Level

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  • Keller, Wolfgang
  • Utar, Hale

Abstract

This paper examines the role of international trade for job polarization, the phenomenon in which employment for high- and low-wage occupations increases but mid-wage occupations decline. With employer-employee matched data on virtually all workers and firms in Denmark between 1999 and 2009, we use instrumental-variables techniques and a quasi-natural experiment to show that import competition is a major cause of job polarization. Import competition with China accounts for about 17% of the aggregate decline in mid-wage employment. Many mid-skill workers are pushed into low-wage service jobs while others move into high-wage jobs. The direction of movement, up or down, turns on the skill focus of workers' education. Workers with vocational training for a service occupation can avoid moving into low-wage service jobs, and among them workers with information-technology education are far more likely to move into high-wage jobs than other workers.

Suggested Citation

  • Keller, Wolfgang & Utar, Hale, 2016. "International Trade and Job Polarization: Evidence at the Worker-Level," CEPR Discussion Papers 11311, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:11311
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    Cited by:

    1. 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).
    2. Fischer, Andreas M & Saure, Philip, 2018. "Identifying Chinese Supply Shocks - Effects of Trade on Labor Markets," CEPR Discussion Papers 13122, C.E.P.R. Discussion Papers.
    3. James Harrigan & Ariell Reshef & Farid Toubal, 2016. "The March of the Techies: Technology, Trade, and Job Polarization in France, 1994-2007," Working Papers 2016-15, CEPII research center.
    4. Giorgio Barba Navaretti & Lionel Fontagné & Gianluca Orefice & Giovanni Pica & Anna Rosso, 2019. "TBTs, Firm Organization and Labour Structure- The effect of Technical Barriers to Trade on Skills," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-02296142, HAL.
    5. Terhi Maczulskij, 2019. "Occupational Mobility of Routine Workers," Working Papers 327, Palkansaajien tutkimuslaitos, Labour Institute for Economic Research.
    6. Borrs, Linda & Knauth, Florian, 2021. "Trade, technology, and the channels of wage inequality," European Economic Review, Elsevier, vol. 131(C).
    7. Giorgio Barba Navaretti & Lionel Fontagné & Gianluca Orefice & Giovanni Pica & Anna Cecilia Rosso, 2019. "TBTs, Firm Organization and Labour Structure," Working Papers 2019-14, CEPII research center.
    8. Pekkala Kerr, Sari & Maczulskij, Terhi & Maliranta, Mika, 2016. "Within and Between Firm Trends in Job Polarization: Role of Globalization and Technology," ETLA Working Papers 41, The Research Institute of the Finnish Economy.
    9. Crowley, Meredith & Meng, Ning & Song, Huasheng, 2018. "Tariff scares: Trade policy uncertainty and foreign market entry by Chinese firms," Journal of International Economics, Elsevier, vol. 114(C), pages 96-115.
    10. Pauline Charnoz & Michael Orand, 2017. "Technical change and automation of routine tasks: Evidence from local labour markets in France, 1999‑2011," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Études Économiques (INSEE), issue 497-498, pages 103-122.
    11. Gueyon Kim & Dohyeon Lee, 2020. "Offshoring and Segregation by Skill: Theory and Evidence," Working Papers 2020-073, Human Capital and Economic Opportunity Working Group.
    12. Egger, Peter H. & Kaynak, Pinar & Zoller-Rydzek, Benedikt, 2020. "Indirect effects of trade shocks on Turkish local labor markets," Regional Science and Urban Economics, Elsevier, vol. 83(C).
    13. Andrea Salvatori, 2018. "The anatomy of job polarisation in the UK," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 52(1), pages 1-15, December.
    14. Keller, Wolfgang & Utar, Hale, 2018. "Globalization, Gender, and the Family," CEPR Discussion Papers 13317, C.E.P.R. Discussion Papers.
    15. Jacob Rubak Holm & Bram Timmermans & Christian Richter Ostergaard, 2017. "The impact of multinational R&D spending firms on job polarization and mobility," JRC Working Papers JRC108560, Joint Research Centre (Seville site).
    16. Martina Magli, 2020. "The Direct and Indirect Effect of Services Offshoring on Local Labour Market Outcomes," CESifo Working Paper Series 8413, CESifo.
    17. Dix-Carneiro, Rafael & Kovak, Brian K., 2019. "Margins of labor market adjustment to trade," Journal of International Economics, Elsevier, vol. 117(C), pages 125-142.
    18. Davidson, Carl & Heyman, Fredrik & Matusz, Steven & Sjöholm, Fredrik & Zhu, Susan Chun, 2020. "Globalization, Recruitments and Job Mobility," Working Papers 2020:20, Lund University, Department of Economics.
    19. Nicola Grassano & Alexander Coad & Jacob Holm & Christian Ostergaard & Bram Timmermans & Antonio Vezzani, 2018. "R&D Intensive Corporations and the Job Market: The Danish Case," JRC Working Papers JRC112709, Joint Research Centre (Seville site).
    20. Huber, Katrin & Winkler, Erwin, 2019. "All you need is love? Trade shocks, inequality, and risk sharing between partners," European Economic Review, Elsevier, vol. 111(C), pages 305-335.
    21. Charles M. Beach, 2016. "Changing income inequality: A distributional paradigm for Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(4), pages 1229-1292, November.
    22. Holm, Jacob Rubæk & Lorenz, Edward & Nielsen, Peter, 2020. "Work organization and job polarization," Research Policy, Elsevier, vol. 49(8).
    23. Brussevich, Masha, 2018. "Does trade liberalization narrow the gender wage gap? The role of sectoral mobility," European Economic Review, Elsevier, vol. 109(C), pages 305-333.

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    More about this item

    Keywords

    import competition; inequality; occupational change; vocational education;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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