TY - JOUR
T1 - Labor markets and kaleidoscopic comparative advantage
AU - Traça, D.
PY - 2005/8
Y1 - 2005/8
N2 - Capturing the notion of kaleidoscopic comparative advantage (Bhagwati, 1998), we show that international trade increases the volatility of profitability. In this framework, we address the labor market implications of an increase in openness, when insurance and credit markets are imperfect. With kaleidoscopic comparative advantage, trade raises the likelihood of firm shutdown and worker displacement, which, in equilibrium, affects wage contracts. In a simple model, we analyze the consequences for wage levels, earnings volatility, job instability, and income distribution, of the openness of previously nontraded industries to international trade.
AB - Capturing the notion of kaleidoscopic comparative advantage (Bhagwati, 1998), we show that international trade increases the volatility of profitability. In this framework, we address the labor market implications of an increase in openness, when insurance and credit markets are imperfect. With kaleidoscopic comparative advantage, trade raises the likelihood of firm shutdown and worker displacement, which, in equilibrium, affects wage contracts. In a simple model, we analyze the consequences for wage levels, earnings volatility, job instability, and income distribution, of the openness of previously nontraded industries to international trade.
UR - http://www.scopus.com/inward/record.url?scp=28144442418&partnerID=8YFLogxK
U2 - 10.1111/j.1467-9396.2005.00515.x
DO - 10.1111/j.1467-9396.2005.00515.x
M3 - Article
AN - SCOPUS:28144442418
SN - 0965-7576
VL - 13
SP - 431
EP - 444
JO - Review of International Economics
JF - Review of International Economics
IS - 3
ER -