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Preferential trade agreements and the labour market

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  • Ornelas, Emanuel.

Abstract

Labor market consequences are at the forefront of most debates on the merits of trade liberalization. Preferential trade agreements (PTAs) have become the primary form of trade liberalization in most countries, and several studies have shown that discriminatory and nondiscriminatory trade liberalization can lead to very different outcomes. Yet to date there has not been any attempt to study the specific labor market implications of preferential liberalization. In this article I argue that the labor market consequences of unilateral or multilateral non-discriminatory trade liberalization and those stemming from integration in the context of PTAs can indeed be quite distinct, and therefore the latter must be given closer scrutiny. I provide a short summary of both the theoretical literature on trade and the labor market and the literature on preferential liberalization. Relying on the insights from those two—largely independent—lines of research, I then discuss why liberalization through PTAs can have consequences for the labor market that are considerably different from the effects of lowering trade barriers in a non-discriminatory fashion. Examples of areas where those differences are likely to be meaningful include the nature of labor market adjustment costs, the incentives for firms to start exporting, and the effects on "job rents."
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  • Ornelas, Emanuel., 2012. "Preferential trade agreements and the labour market," ILO Working Papers 994691833402676, International Labour Organization.
  • Handle: RePEc:ilo:ilowps:994691833402676
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    3. Francesco Di Comite & Antonella Nocco & Gianluca Orefice, 2018. "Trade liberalization and the wage gap: the role of vertical linkages and fixed costs," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(1), pages 75-115, February.

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    More about this item

    Keywords

    employment; unemployment; wages; trade liberalization.; trade agreement.; trade policy.; emploi; chômage; salaire; libéralisation des échanges; accord commercial; politique du commerce international; empleo; desempleo; salario; liberalización del intercambio; convenio comercial; política de comercio internacional;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F15 - International Economics - - Trade - - - Economic Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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