Discussion paper

DP16009 Trade, Jobs, and Worker Welfare

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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Citation

Artuc, E, P Bastos and E Lee (eds) (2021), “DP16009 Trade, Jobs, and Worker Welfare”, CEPR Press Discussion Paper No. 16009. https://cepr.org/publications/dp16009