Estimating household responses to trade reforms: net consumers and net producers in rural Mexico
In: Policy research working paper 3695
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In: Policy research working paper 3695
In: World Bank Policy Research Working Paper No. 6237
SSRN
Working paper
In: American Journal of Agricultural Economics, Volume 90, Issue 3, p. 748-764
SSRN
In: Journal of international economics, Volume 70, Issue 1, p. 140-160
ISSN: 0022-1996
In: Journal of international economics, Volume 66, Issue 2, p. 447-470
ISSN: 0022-1996
This paper provides new evidence on the impacts of trade reforms on wages. We first introduce a model of trade that combines a non-competitive wage setting mechanism due to unions with a factor abundance hypothesis. The predictions of the model are then econometrically investigated using Argentine data. Instead of achieving identification by comparing industrial wages before and after one episode of trade liberalization, our strategy exploits the recent historical record of policy changes adopted by Argentina: from significant protection in the early 1970s, to the first episode of liberalization during the late 1970s, then back to a slowdown of reforms during the 1980s, and finally to the second episode of liberalization in the 1990s. These swings in trade policy represent broken trends in trade reforms that we can compare with observed trends in wages and wage inequality. We use unusual historical data sets of trends in tariffs, wages, and wage inequality to examine the structure of wages in Argentina and to explore how it is affected by tariff reforms. We find that i) trade liberalization, ceteris paribus, reduces wages; ii) industry tariffs reduce the industry skill premium; iii) conditional on the structure of tariffs at the industry level, the average tariff in the economy is positively associated with the aggregate skill premium. These findings suggest that the observed trends in wage inequality in Latin America can be reconciled with the Stolper-Samuelson predictions in a model with unions.
BASE
In: ADBI Working Paper No. 629
SSRN
Working paper
In: Journal of international economics, Volume 98, p. 21-35
ISSN: 0022-1996
In: The economic journal: the journal of the Royal Economic Society, Volume 132, Issue 646, p. 2048-2074
ISSN: 1468-0297
Abstract
We explore how different investment frictions affect the patterns of responses of labour markets to tariff cuts. To investigate these patterns, we formulate a multi-sector dynamic model featuring capital and labour adjustment costs that we fit to Argentine data. Using counterfactual simulations of a tariff decline in the textile sector, we show that capital adjustment can create long-run responses of real wages that are larger than the short-run responses. This happens as textile firms disinvest during the transition. We also show that the reduction of tariffs on capital inputs boosts investment and real wages across sectors.
In: Journal of international economics, Volume 120, p. 1-45
ISSN: 0022-1996
In: The Canadian journal of economics: the journal of the Canadian Economics Association = Revue canadienne d'économique, Volume 52, Issue 2, p. 763-783
ISSN: 1540-5982
AbstractThis paper explores the link between exports and the demand for skilled tasks. Using the Chilean Encuesta Nacional Industrial Anual (ENIA), an annual census of manufacturing firms, we first show that Chilean exporters utilize more skills than Chilean non‐exporters. More importantly, we establish a distinct pattern of task differentiation among exporters both within skilled and unskilled tasks. Exporting firms demand the services of skilled specialized workers (engineers) as opposed to skilled administrative workers and managers. In addition, exporters demand less unskilled labour, especially blue‐collar operatives. This suggests that exporters substitute skilled engineers for unskilled blue‐collar workers to perform export‐related tasks.
This paper characterizes the trade-off between the income gains and the inequality costs of trade using survey data for 54 developing countries. Tariff data on agricultural and manufacturing goods are combined with household survey data on detailed income and expenditure patterns to estimate the first-order effects of the elimination of import tariffs on household welfare. The paper assesses how these welfare effects vary across the distribution by estimating impacts on the consumption of traded goods, wage income, farm and non-farm family enterprise income, and government transfers. For each country, the income gains and the inequality costs of trade liberalization are quantified and the trade-offs between them are assessed using an Atkinson social welfare index. The analysis finds average income gains from import tariff liberalization in 45 countries and average income losses in nine countries. Across countries in the sample, the gains from trade are 1.9 percent of real household expenditure on average. We find overwhelming evidence of a trade-off between the income gains (losses) and the inequality costs (gains), which arise because trade tends to exacerbate income inequality: 45 countries face a trade-off, while only nine do not. The income gains typically more than offset the increase in inequality. In the majority of developing countries, the prevailing tariff structure thus induces sizable welfare losses.
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This paper investigates differences in the composition of employment between exporting and non-exporting firms. In particular, it asks whether exporting firms hire more engineers relative to blue-collar workers than non-exporting firms. In a stylized partial-equilibrium model, firms produce goods of varying quality and exporters tend to produce higher quality goods, which are intensive in engineers relative to blue-collar workers. Firms are heterogeneous and more productive firms become exporters and have a higher demand for engineers. The paper provides causal evidence in support of these theories using the Chilean Encuesta Nacional Industrial Anual, an annual census of manufacturing firms. The results from an instrumental variable estimator suggest that Chilean exporters indeed utilize a higher share of engineers over blue-collar workers.
BASE
In: Journal of international economics, Volume 95, Issue 1, p. 28-41
ISSN: 0022-1996