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We would like to welcome the following new members of the InsTED network.
Dr. Zohal Hessami (University of Konstanz) Her research interests are in Political Economy, Economic & Fiscal Policy, Public Finance & Public Governance, and Applied Econometrics.
Dr. Thushyanthan Baskaran (University of Gottingen) His research interests are in Public Economics, Political Economics, and Development Economics.
Most of the public debate concerning the liberalization of international trade revolves around the effect of trade on the levels of employment. Proponents of trade liberalization argue that higher demand for domestic products from abroad would increase employment. Opponents worry that competition with imported products, in driving domestic producers out of business, would lead to job losses overall. For scholars, however, the complexity of countries’ economies and the functioning of their labor markets suggest that both views are at least incomplete.In the academic literature on this issue, models of unemployment incorporate labor market frictions into the market clearing mechanism, so that unemployment arises endogenously as an equilibrium outcome.
In the early literature, labor market frictions were restricted to minimum wages, rigid wages or union activity. The more recent literature incorporates search frictions, efficiency wages, fair wages, implicit contracts, insider/outsider models of labor markets, among others. In these models, because the allocation of resources determines employment across sectors, policies that affect the allocation of resources can have an impact on the levels of employment. If international trade affects the allocation of resources, then employment is also affected by trade.There is now a growing body of research that emphasizes the decisions of individual firms and workers in understanding the causes and consequences of aggregate trade on employment. This emergent theoretical literature is a response to empirical studies using micro data, which reveal a number of features of worker and producer behaviors that were not well explained by pre-existing theories of international trade. In particular, these models introduce search and matching frictions into a (Melitz type) model of firm heterogeneity to analyze employment as well as the income distribution. With firm heterogeneity it can be shown that, for example, more productive firms pay higher wages while exporting increases the wage paid by a firm with a given productivity, so that the opening of trade enhances wage inequality but can either raise or reduce unemployment.
Agell, Jonas and Per Lundborg (1995), “Fair Wages in the Open Economy“, Economica, 62: 335-351.
Bombardini, M.; G. Gallipoli and G. Pupato (2012) ”Skill Dispersion and Trade Flows”, American Economic Review, 102(5): 2327-2348.
Botero, Juan C., Simeon Djankov, Rafael La Porta, Florencio Lopez-de-Silanes and Andrei Shleifer (2004), “The Regulation of Labor“, Quarterly Journal of Economics, 119(4): 1339-1382. [Working paper version]
Brecher, Richard A. (1974) “Minimum Wage Rates and the Pure Theory of International Trade” The Quarterly Journal of Economics, 88(1):98-116.
Cacciatore, M. (2014) “International trade and macroeconomic dynamics with labor market frictions”, Journal of International Economics, 93(1):17-30.
Copeland, B. R. (1989) “Efficiency Wages in a Ricardian Model of International Trade”, Journal of International Economics, 27(3):221–244.
Dao, M. C. (2013) “Foreign Labor Costs and Domestic Employment: What are the Spillovers?” Journal of International Economics, 89(1): 154-171.
Davidson, C. and S. J. Matusz (2012) “A Model of Globalization and Firm-Worker Matching: How Good is Good Enough?” International Review of Economics & Finance, 23(SI): 5-15.
Davidson, C., M. Lawrence and S. Matusz (1999), “Trade and Search Generated Unemployment“, Journal of International Economics, 48: 271-299.
Davidson, C. (1990) “Introduction.” In: Recent Developments in the Theory of Involuntary Unemployment Kalamazoo, MI: W.E. Upjohn Institute for Employment Research, pp. 1-5.
Davis, D. R. and J. Harrigan (2011) “Good Jobs, Bad Jobs, and Trade Liberalization” Journal of International Economics, 84(1): 26-36. [Working paper version]
Fadinger, H. and K. Mayr (2014) “Skill-Biased Technological Change, Unemployment, and Brain Drain” Journal of the European Economic Association, 12(2): 397-431. [Working paper version]
Felbermayr, G. J.; M. Larch and W. Lechthaler, (2013) “Unemployment in an Interdependent World”, American Economic Journal–Economic Policy, 5(1): 262-301. [Working paper version]
Felbermayr, G. J.; M. Larch and W. Lechthaler (2012) “Endogenous Labor Market Institutions in an Open Economy”, International Review of Economics & Finance, 23(SI): 30-45.
Hasan, R.; D. Mitra, and P. Ranjan (2012) “Trade Liberalization and Unemployment: Theory and Evidence from India” Journal of Development Economics, 97(2): 269-280.
Helpman, E,; O. Itskhoki, Oleg and S. Redding (2010) “Inequality And Unemployment In A Global Economy” Econometrica, 78(4): 1239-1283 [Working paper version]
Helpman, E. and O. Itskhoki (2010) “Labor Market Rigidities, Trade and Unemployment”. Review of Economic Studies, 77(3): 1100-1137 [Working paper version]
Kreickemeier, U. and D. Nelson (2006), “Fair Wages, Unemployment and Technological Change in a Global Economy,” Journal of International Economics, 70: 451—469.
Melitz, M. and Alejandro Cuñat (2012) “Volatility, Labor Market Flexibility, and the Pattern of Comparative Advantage”, Journal of the European Economic Association, 10: 225-254.
Matusz, S. J. (1986) “Implicit Contracts, Unemployment and International Trade”, The Economic Journal, 96(382): 307-322.
Paz, L. S. (2014) “The Impacts of Trade Liberalization on Informal Labor Markets: A Theoretical and Empirical Evaluation of the Brazilian Case”, Journal of International Economics 92(2): 330-348. [Working paper version]
de Pinto, M. and J. Michaelis (2014) “International Trade and Unemployment-the Worker-selection Effect”, Review of International Economics 22(2): 226-252.
Ranjan, P. (2013) “Offshoring, Unemployment, and Wages: The Role of Labor Market Institutions” Journal of International Economics, 89(1): 172-186. [Working paper version]
Ranjan, P. (2012) “Trade Liberalization, Unemployment, and Inequality with Endogenous Job Destruction” International Review of Economics & Finance, 23(SI): 16-29.
Seker, M. (2012) “Rigidities in Employment Protection and Exporting” World Development, 40(2): 238-250. [Working paper version]
Tang, H. (2012) “Labor Market Institutions, Firm-Specific Skills, and Trade Patterns” Journal of International Economics, 87(2): 337-351. [Working paper version]
We would like to welcome Dr.Simone Moriconi (Università Cattolica di Milano) to the InsTED network. His research interests include both theoretical and applied research in the fields of public, labour and international economics.
The Montevideo-Oxford Latin American Economic History Data Base (MOxLAD) has been added under the topic of Economic Performance.
MOxLAD is a partnership between the Economic and Social History Programme (PHES), of the Universidad de la República, Montevideo, and the Latin American Centre and the Department of International Development, Oxford University.
10th Australasian Trade Workshop
School of Economics, University of Sydney
7‐8 April 2015
Local Organisers
Dr Mark Melatos
Professor John Romalis
The School of Economics at the University of Sydney will host the 10th Australasian Trade Workshop on 7-8 April 2015.
Keynote speakers will be Pablo Fajgelbaum of the University of California Los Angeles and Thibault Fally of the University of California Berkeley.
We invite colleagues in this field (JEL-Classification F0 to F2) to submit papers for presentation at the workshop. If you are interested, please send your abstract or preferably your complete paper to tradeworkshop@anu.edu.au.
The deadline for submissions is November 7, 2014.
Conference participants are expected to serve as discussants at the workshop. There is no registration fee. Unfortunately we are unable to offer financial assistance to participants.
Upon acceptance, you will be asked to book your travel and accommodation independently. The (optional) conference dinner will be held on Tuesday April 7 at a Sydney restaurant. The cost of this event will be approximately A$80-$100 per person.
If you have any further questions about the workshop, please e-mail Mark Melatos: mark.melatos@sydney.edu.au.
We would like to welcome the following new members of the InsTED network.
Prof. Shushanik Hakobyan (Fordham University) Her research focuses on the impact of trade liberalization on labor market outcomes and on the relationship between trade policy and economic development.
Prof. J. Anthony Cookson (University of Colorado) His fields of specialization are Corporate Finance, Industrial Organization, and Applied Microeconomics.
Global Entrepreneurship and Development Index has been added under the topic of Economic Performance. GEDI Index 2014 is provided by the Global Entrepreneurship and Development Institute.