American Economic Review: Insights
ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)
Trade Shocks and Labor Market Adjustment
American Economic Review: Insights
vol. 3,
no. 1, March 2021
(pp. 115–30)
Abstract
We develop a framework to analyze the impact of trade shocks on a range of labor market adjustment margins in economies with a large number of sectors and labor groups. We provide analytic results characterizing equilibria. We show that labor groups earning a greater share of wage income in sectors with relative price declines experience a relative increase in unemployment and nonparticipation and decrease in wages and welfare. Our framework provides a guide for quantitative and empirical investigations into the labor market impacts of trade shocks.Citation
Kim, Ryan, and Jonathan Vogel. 2021. "Trade Shocks and Labor Market Adjustment." American Economic Review: Insights, 3 (1): 115–30. DOI: 10.1257/aeri.20200101Additional Materials
JEL Classification
- F16 Trade and Labor Market Interactions
- J22 Time Allocation and Labor Supply
- J31 Wage Level and Structure; Wage Differentials
- J64 Unemployment: Models, Duration, Incidence, and Job Search