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Trade policy and wage inequality : a structural analysis with occupational and sectoral mobility
 
Author:Artuc, Erhan; McLaren, John; Collection Title:Policy Research working paper ; no. WPS 6194
Country:World; Date Stored:2012/09/07
Document Date:2012/09/01Document Type:Policy Research Working Paper
SubTopics:Economic Theory & Research; Work & Working Conditions; Housing & Human Habitats; Labor Markets; Labor PoliciesLanguage:English
Major Sector:Industry and tradeRel. Proj ID:1W-Trade And Poverty- -- P111069;
Region:The World RegionReport Number:WPS6194
Sub Sectors:Other domestic and international tradeVolume No:1 of 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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