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Intergenerational Effects of Trade Liberalization


  • Erhan Artuc

    (Koc University, Istanbul)


2002 Pew Global Attitudes survey shows that workers’ support for free trade decreases with age, which is a phenomenon previously unexplored by economists. We explore distributional effects of trade liberalization in particular age and gains from free trade, using a dynamic structural general equilibrium model. The model we develop here is in the same spirit as Artuc, Chaudhuri and McLaren (2007), but allows for a much richer treatment of both ex-ante and endogenous worker heterogeneity. This feature requires a completely different estimation strategy, which comes at a cost of more computation time and stronger assumptions on workers’ expectations. After estimating the structural model with U.S. data sets NLSY and CPS, we simulate a hypothetical trade liberalization in metal manufacturing sector (which has been especially vulnerable to trade shocks in the past, the steel industry in particular). We show gradual adjustment of labor allocation, wages and prices in response to this trade shock. We find a “mirror effect” where very young workers are either moderately better off or moderately worse off, while older workers are either extremely better off or extremely worse off depending on their sectors.

Suggested Citation

  • Erhan Artuc, 2009. "Intergenerational Effects of Trade Liberalization," 2009 Meeting Papers 870, Society for Economic Dynamics.
  • Handle: RePEc:red:sed009:870

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    References listed on IDEAS

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    Cited by:

    1. Moritz Ritter, 2014. "Offshoring and occupational specificity of human capital," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(4), pages 780-798, October.
    2. Andrei A Levchenko & Jing Zhang, 2013. "The Global Labor Market Impact of Emerging Giants: A Quantitative Assessment," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(3), pages 479-519, August.
    3. Harrison, Ann & McLaren, John & McMillan, Margaret S., 2010. "Recent findings on trade and inequality:," IFPRI discussion papers 1047, International Food Policy Research Institute (IFPRI).
    4. Porto, Guido, 2012. "The cost of adjustment to green growth policies : lessons from trade adjustment costs," Policy Research Working Paper Series 6237, The World Bank.
    5. repec:mie:wpaper:6237 is not listed on IDEAS

    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers


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