Trade, Labor and Poverty

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Permanent URL for this page: http://econ.worldbank.org/programs/trade/labor

The conventional wisdom regarding trade and labor is that trade reforms and other types of trade shocks produce winners and losers. However, the literature on this topic remains ambiguous, partly because the distributive consequences of trade reforms depend on, among other factors, the initial structure of tariffs, factor endowments, and behind-the-border policies. However, a key issue for understanding how trade (and globalization) affects the distribution of income and poverty is whether the demand for skilled labor relative to unskilled labor changes as a consequence of increased exposure to international competition and technology adoption. Furthermore, in the short-run, trade shocks can bring adjustment costs, especially if complementary factors of production are industry specific. If this is the case, then the effect of trade will vary across workers employed in different industries. Thus, our program examined how trade affects the demand for skilled labor, how exports affect the wages of skilled labor relative to unskilled labor, and on measuring and assessing adjustment costs.

• New Book: Trade Adjustment Costs in Developing Countries: Impact, Determinants and Policy Responses, by Guido Porto and Bernard Hoekman.
  Purchase | Download the book (pdf - 3.3 mb) 
  This book  examines the impacts, determinants and policy responses that can help reduce adjustment costs.
  
  
• Conference: Globalization and Employment: Global Shocks, Structural Change and Policy Response
  The International Labour Organization, the Organization for Economic Cooperation and the World Bank joined forces to assess the effects of the Global Financial Crisis on labor markets. Presentation 
  
  
• New Research on the relationship between exports and wages provides new analytical frameworks for understanding why exports tend to raise the returns to schooling. Exporting to markets with higher incomes than in domestic markets might explain the positive correlation between exports and wages and exports and the hiring of skilled labor. Please see the working papers by Irene Brambilla and her co-authors:
  • Exports, Export Destinations, and Skills
  • Skills, Exports and the Wages of Five Million Latin American Workers
  • Adjusting to Trade-Policy Changes in Export Markets

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Books

• Trade Adjustment Costs in Developing Countries: Impact, Determinants and Policy Responses, Guido Porto and Bernard Hoekman.
  This book  examines the impacts, determinants and policy responses that can help reduce adjustment costs.
  Purchase | Download the book (pdf - 3.3 mb) | Preliminary drafts of the book chapters
  
  
• Poverty and the WTO - Impacts of the Doha Development Agenda, Thomas W. Hertel and L. Alan Winters, December 2005

• Lederman, Daniel, Irene Brambilla, Rafael Dix-Carneiro, and Guido Porto, “Skills, Exports, and the Wages of Seven Million Latin American Workers,” World Bank Economic Review,  26(1): 34-60, 2012

• Trends in Tariff Reforms and in the Structure of Wages, Sebastian Galiana and Guido Porto, Review of Economics and Statistics 92(3): 482-494, 2010.

• International Market Access and Poverty in Argentina, Guido Porto, Review of International Economics 18(2): 396-407, 2010.
  
• Trade, Regulations, and Income, Caroline Freund and Bineswaree Bolaky, Journal of Development Economics 87(2): 309-21, 2008.

• Please see a complete list of Working Papers in the Library at the bottom of the page.

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• Returns to schooling and skill premiums by industry in sixteen Latin American and Caribbean Countries - forthcoming
• Estimates of Distortions to Agricultural Incentives, 1955-2007
• Trade, Production and Protection Database, 1976-2004
• Social Accounting Matrices for the Regions of Russia, 2001 

• October 2010 - Conference on Labor Markets, the Global Financial Crisis, and Adjustments Costs, sponsored by ILO, OECD and World Bank 

• International Labour Organization 
• World Trade Organization 
• DECRG Poverty and Inequality website 
• World Bank's researcher John T. Giles' website 
• DECRG Macroeconomics and Growth Group website 
• William F. Maloney's website 
• Guido Porto's website 

• Daniel Lederman 

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