International Trade, Wages, and Unemployment

2020 ◽  
Author(s):  
Priyaranjan Jha
Keyword(s):  
Trade Liberalization ◽  
Heterogeneous Firms ◽  
Theoretical Models ◽  
Empirical Literature ◽  
Allocation Of Resources ◽  
Trade Theory ◽  
Implicit Contracts ◽  
Export Sector ◽  
Wage Effects ◽  
The Impact

Traditional trade theory has focused on the allocation of resources between various sectors of the economy and how it changes in response to trade liberalization while maintaining the assumption of free mobility of resources across sectors within an economy. This simplifying assumption is at odds with empirical evidence which shows considerable frictions in the movement of resources between sectors, at least in the short to medium run. Workers who lose their jobs in the import competing sector may find it hard to find a job immediately in the export sector. This has given rise to a growing literature that incorporates frictions in the mobility of factors of production in general, and labor in particular, in trade models. This article surveys the literature on trade and unemployment where unemployment is caused by search frictions or wage rigidity of some kind such as minimum wage, efficiency wage, or implicit contracts. While the focus is on unemployment, any model studying the impact of trade on labor markets features wage effects, too, and a brief discussion of wage effects is also provided. Trade affects unemployment in these multi-sector models through two main channels: sectoral unemployment rates and intersectoral reallocation of resources. In newer trade models with heterogeneous firms, trade can change unemployment by affecting the allocation of resources within a sector. While the theoretical models in this literature identify various channels through which trade liberalization affects unemployment, many of these channels have opposing implications for unemployment, rendering the net effect of trade liberalization on unemployment ambiguous in many settings. This has also given rise to an empirical literature studying the implications of trade liberalization on unemployment.

Trade Liberalization, Structural Change, and Economic Growth

2021 ◽  
pp. 407-441
Author(s):  
Michael Landesmann ◽  
Neil Foster-McGregor
Keyword(s):  
Economic Growth ◽  
Structural Change ◽  
Trade Liberalization ◽  
Productivity Growth ◽  
Global Economy ◽  
Adam Smith ◽  
Trade Theory ◽  
New Trade Theory ◽  
The Impact ◽  
The Relationship

Trade and the integration of countries into the global economy is one of the main forces shaping the structural composition of economies, an effect which in turn is expected to impact upon productivity and growth. Structural change can be restrained or reinforced by international trade. This chapter reviews the theory on the relationship between trade and trade liberalization and both structural change and growth, from the contributions of Adam Smith to the more recent new new trade theory beginning with the work of Melitz. The chapter further discusses the existing empirical evidence on the relationship between trade and structural change, before concluding by presenting evidence on the impact of trade liberalization on productivity growth for a broad sample of countries, further decomposing the effect into an effect due to structural change and an effect due to within sector productivity developments.

scholarly journals The Impact of Immigration: Why Do Studies Reach Such Different Results?

2016 ◽  
Vol 30 (4) ◽  
pp. 31-56 ◽  
Author(s):  
Christian Dustmann ◽  
Uta Schönberg ◽  
Jan Stuhler
Keyword(s):  
Labor Supply ◽  
Empirical Models ◽  
Relative Wage ◽  
Empirical Literature ◽  
The Third ◽  
Experience Levels ◽  
Heterogeneous Labor ◽  
Wage Effects ◽  
The Impact ◽  
Biased Estimates

We classify the empirical literature on the wage impact of immigration into three groups, where studies in the first two groups estimate different relative effects, and studies in the third group estimate the total effect of immigration on wages. We interpret the estimates obtained from the different approaches through the lens of the canonical model to demonstrate that they are not comparable. We then relax two key assumptions in this literature, allowing for inelastic and heterogeneous labor supply elasticities of natives and the "downgrading" of immigrants. “Downgrading” occurs when the position of immigrants in the labor market is systematically lower than the position of natives with the same observed education and experience levels. Downgrading means that immigrants receive lower returns to the same measured skills than natives when these skills are acquired in their country of origin. We show that heterogeneous labor supply elasticities, if ignored, may complicate the interpretation of wage estimates, and particularly the interpretation of relative wage effects. Moreover, downgrading may lead to biased estimates in those approaches that estimate relative effects of immigration, but not in approaches that estimate total effects. We conclude that empirical models that estimate total effects not only answer important policy questions, but are also more robust to alternative assumptions than models that estimate relative effects.

Empirical Knowledge on Foreign Military Intervention

2017 ◽  
Author(s):  
Jeffrey Pickering ◽  
David F. Mitchell
Keyword(s):  
Military Intervention ◽  
Theoretical Models ◽  
Empirical Literature ◽  
Military Force ◽  
Explanatory Variables ◽  
Theoretical Approaches ◽  
The Subject ◽  
Cumulative Knowledge ◽  
The Impact ◽  
Insight Into

While the empirical literature on foreign military intervention has made considerable progress identifying the causes and consequences of military intervention, we still have much to learn about the subject. Mixed and even contradictory results remain common in the literature, and cumulative knowledge has in many instances proven elusive. Arguably the two most prominent theoretical approaches in recent scholarship, the bargaining model and the rivalry approach, have provided important insight into the phenomenon. They would nonetheless benefit from further refinement. Common explanatory variables outside of these two approaches also require further theoretical and empirical development. The literature has recently begun to examine the impact that military intervention has on target societies as well, with particular attention being given to target state democratization, human rights development, and conflict resolution. Empirical research could shed additional light on all of these phenomena by developing more detailed theory and data on intervention targets. It would also profit from incorporating systematic knowledge on leaders’ proclivities to use military force into current theoretical models.

The Impact of Public Debt on Economic Growth: A Review of Contemporary Literature

2018 ◽  
Vol 45 (4) ◽  
pp. 339-357
Author(s):  
Talknice Saungweme ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Positive Impact ◽  
Empirical Studies ◽  
Theoretical Models ◽  
Empirical Literature ◽  
Long Run ◽  
Negative Effect ◽  
The Impact ◽  
The Relationship

This article provides a detailed survey of existing theoretical and empirical literature on the impact of public debt on economic growth in both developing and developed economies. The aim of the article is to add to the existing debate on the relationship between public debt and economic growth in world economies. The survey finds diverse and, in some cases, inconsistent evidence on the relative impact of public debt on economic growth. Although the majority of the surveyed literature supports the negative effect of public debt on economic growth, several other studies have found a long-run positive impact of public debt on economic growth through the fiscal multiplier effect. The article also found that a few other studies support the Ricardian Equivalence Hypothesis (REH), which states that the relationship between public debt and economic growth is nonexistent. On balance, the article also found that there is a growing body of empirical evidence, which supports the presence of threshold effects in the relationship between public debt and economic growth. Overall, it concludes that theoretical models and empirical studies yield inconclusive results depending on a set of heterogeneous factors, including the level of development of the sampled countries, data coverage, methodology used, and the researchers’ choice of control variables, among other factors. This literature survey differs predominantly from other earlier studies in that it provides a comprehensive review of the linkage between government debt and economic growth, in addition to disentangling public debt into two components, domestic and foreign, and expounding on their relative effects on economic growth.

scholarly journals Does Economic Globalization Influence the US Policy Mood?: A Study of US Public Sentiment, 1956–2011

2014 ◽  
Vol 46 (1) ◽  
pp. 95-125 ◽  
Author(s):  
Erica Owen ◽  
Dennis P. Quinn
Keyword(s):  
Political Economy ◽  
Multinational Firms ◽  
International Political Economy ◽  
Heterogeneous Firms ◽  
Economic Globalization ◽  
The United States ◽  
Trade Flows ◽  
Trade Theory ◽  
Size Of Government ◽  
The Impact

Does increasing economic globalization influence aggregate policy mood toward the role and size of government in the United States? Drawing on insights from international political economy scholarship, this article suggests that the impact of trade on aggregate preferences will depend on citizens’ exposure to trade. It hypothesizes that employees of import-competing, export-oriented and multinational firms will adopt a ‘compensatory’ model in which higher levels of imports (exports) lead to a liberal (conservative) shift in policy preferences for more (less) government. It distinguishes between intrafirm and non-intrafirm trade flows. It measures policy mood using Stimson's ‘Mood’, and estimates Error Correction and Instrumental Variable models. Trade flows strongly influence Mood in a manner consistent with hypotheses drawn from international political economy and heterogeneous firms (or ‘new new’) trade theory.

Anticipatory and Post-Event Rumination in Social Anxiety Disorder: A Review of the Theoretical and Empirical Literature

2014 ◽  
Vol 31 (2) ◽  
pp. 79-101 ◽  
Author(s):  
Erika S. Penney ◽  
Maree J. Abbott
Keyword(s):  
Anxiety Disorder ◽  
Social Anxiety ◽  
Performance Appraisal ◽  
Social Anxiety Disorder ◽  
Theoretical Models ◽  
Cognitive Models ◽  
Psychological Disorder ◽  
Empirical Literature ◽  
Future Research ◽  
The Impact

Social anxiety disorder (SAD) is a psychological disorder characterised by an excessive and persistent fear of social or performance situations, which interferes with daily functioning. Cognitive models of SAD (Clark & Wells, 1995; Hofmann, 2007; Rapee & Heimberg, 1997) emphasise the importance of negative pre- and post-event rumination as a maintaining factor in the cycle of SAD. While the link between negative rumination and SAD is well supported by empirical research, little is understood about this cognitively important process; thus, research investigating the predictors of negative rumination in SAD is important to consider. Within the current literature, performance appraisal appears to be the most likely unique cognitive predictor of post-event rumination. There is limited research into cognitive predictors of pre-event rumination. Treatments targeting this maintaining factor are important to consider. Suggestions for future research examining the cognitive models of SAD by experimentally manipulating perceived social standards in order to examine the impact of high and low perceived social standard on appraisal processes (i.e., threat appraisal and performance appraisal), state social anxiety, and negative pre-event and post-event rumination, are proposed. Implications for theoretical models and efficacious treatments for SAD are discussed.

“And we would have the field”: U.S. Steel and American trade policy, 1908–1912

2017 ◽  
Vol 19 (3) ◽  
pp. 424-453
Author(s):  
Mark R. Brawley
Keyword(s):  
Trade Policy ◽  
Trade Liberalization ◽  
Steel Industry ◽  
Firm Heterogeneity ◽  
Export Sector ◽  
The Third ◽  
The Impact ◽  
American Trade

AbstractRecent surveys revealed few producers in an export sector participate in trade. Economists explained this result by relaxing their assumption about firms’ operations, to produce a novel observation: Trade liberalization disproportionately benefits the most efficient producers in the sector, while potentially harming the least efficient. Political scientists have begun exploring the consequences of this variation, especially in lobbying. This article explores whether the impact of this finer-grained description of interests can be observed in the later stages of our demand-driven models of the politics of trade. I focus on one case with characteristics favorable to observing intra-industry differences: the American steel industry in Taft's presidency. A trade-based cleavage inside the sector determined firms’ interests. Demands shaped policy, as observed in three pieces of legislation: the Payne-Aldrich Act, reciprocity with Canada, and the 1912 tariff. The first liberalized trade in steel, intensifying competition in the industry. The second promised to do the same, with a similar impact. The third had no effect, however, because Taft vetoed the bill. This case illustrates intra-industry firm heterogeneity can provide additional accuracy, revealing a previously undiscovered cleavage. Nonetheless, preferences alone did not determine policy.

The Effects of Employment Protection legislationon Personnel Policies: A Review of Theoretical Modelsand Empirical results

2014 ◽  
pp. 126-140
Author(s):  
O. Mironenko
Keyword(s):  
Personnel Selection ◽  
Selection Criteria ◽  
Theoretical Models ◽  
Employment Protection ◽  
Empirical Results ◽  
Protection Legislation ◽  
Labour Contracts ◽  
Hiring And Firing ◽  
The Impact ◽  
Personnel Policies

Employers incur costs while fulfilling the requirements of employment protection legislation. The article contains a review of the core theoretical models and empirical results concerning the impact of these costs on firms’ practices in hiring, firing, training and remuneration. Overall, if wages are flexible or enforcement is weak, employment protection does not significantly influence employers’ behavior. Otherwise, stringent employment protection results in the reduction of hiring and firing rates, changes in personnel selection criteria, types of labour contracts and dismissal procedures, and, in some cases, it may lead to the growth of wages and firms’ investments to human capital.

The Impact of Quantitative Easing on Emerging Markets – Literature Review

e-Finanse ◽  
2018 ◽  
Vol 14 (4) ◽  
pp. 67-76
Author(s):  
Piotr Bartkiewicz
Keyword(s):  
Emerging Markets ◽  
Large Scale ◽  
Empirical Literature ◽  
Quantitative Easing ◽  
Methodological Choices ◽  
The Subject ◽  
Methodological Approaches ◽  
The Impact ◽  
Sufficient Precision

AbstractThe article presents the results of the review of the empirical literature regarding the impact of quantitative easing (QE) on emerging markets (EMs). The subject is of interest to policymakers and researchers due to the increasingly larger role of EMs in the world economy and the large-scale capital flows occurring after 2009. The review is conducted in a systematic manner and takes into consideration different methodological choices, samples and measurement issues. The paper puts the summarized results in the context of transmission channels identified in the literature. There are few distinct methodological approaches present in the literature. While there is a consensus regarding the direction of the impact of QE on EMs, its size and durability have not yet been assessed with sufficient precision. In addition, there are clear gaps in the empirical findings, not least related to relative underrepresentation of the CEE region (in particular, Poland).

The impact of formality on firm profitability in Bolivia: an heterogeneous assessment

2012 ◽  
pp. 53-74
Author(s):  
Darwin Ugarte Ontiveros
Keyword(s):  
Empirical Literature ◽  
Large Firms ◽  
Marginal Effects ◽  
Heterogeneous Effects ◽  
Firm Profitability ◽  
The Impact ◽  
Formal Status

Recent evidence suggests that formality improves micro-firms profits in Bolivia. This gain is only for firms with 2 to 5 workers, while smaller and larger firms would lose out by formalizing (McKenzie and Sakho, 2010). However, as much of the empirical literature on this topic, the estimations are based on strong assumptions about unobservables. If the returns to formality vary among firms and these variations influence selection into formality, traditional estimators are biased (Heckman and Vytlacil, 2007). In this paper we considerthese elements to estimate the heterogeneous effects of formality on firm profits in Bolivia. We find remarkable heterogeneity in the returns to formality, from -3% to 6%. The group of firms with positive marginal effects from formality corresponds to those which are most likely to register. We also characterize the firms that likely benefit from having a formal status. These would correspond to large firms which work at big scales.

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