Discussion Paper Details

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Title: Trade, Jobs, and Worker Welfare

Author(s): Erhan Artuc, Paulo Bastos and Eunhee Lee

Publication Date: April 2021

Keyword(s): adjustment costs, jobs, Labor Mobility, Trade Shocks and worker welfare

Programme Area(s): International Trade and Regional Economics

Abstract: We study the welfare effects of international trade on workers in a new dynamic general equilibrium discrete choice model of labor mobility, where the workers' choice set of jobs is endogenous. We exploit differential exposure of sectors and regions to destination-specific demand shocks to estimate the impacts of exports on wages, employment, and labor mobility, using employer-employee panel data for Brazil. We employ the same empirical strategy to estimate structural parameters and the different components of changes in model-implied worker welfare. Counterfactual simulations show that the endogenous number of job options significantly magnifies the welfare effects of trade shocks.

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Bibliographic Reference

Artuc, E, Bastos, P and Lee, E. 2021. 'Trade, Jobs, and Worker Welfare'. London, Centre for Economic Policy Research.