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Trade policy and wage inequality : a structural analysis with occupational and sectoral mobility, Volume 1
 
Author:Artuc, Erhan; McLaren, John; Country:World;
Date Stored:2012/09/07Document Date:2012/09/01
Document Type:Policy Research Working PaperSubTopics:Economic Theory & Research; Work & Working Conditions; Housing & Human Habitats; Labor Markets; Labor Policies
Language:EnglishMajor Sector:Industry and trade
Rel. Proj ID:1W-Trade And Poverty- -- P111069;Region:The World Region
Report Number:WPS6194Sub Sectors:Other domestic and international trade
Collection Title:Policy Research working paper ; no. WPS 6194Volume No:1

Summary: A number of authors have argued that a worker's occupation of employment is at least as important as the worker's industry of employment in determining whether the worker will be hurt or helped by international trade. This paper investigates the role of occupational mobility on the effects of trade shocks on wage inequality in a dynamic, structural econometric model of worker adjustment. Each worker in the model can switch either industry, occupation, or both, paying a time-varying cost to do so in a rational-expectations optimizing environment. The authors find that the costs of switching industry and occupation are both high, and of similar magnitude, but in simulations they find that a worker's industry of employment is much more important than either the worker's occupation or skill class in determining whether he or she is harmed by a trade shock.

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