The Impact of Tradeon Wages: What If Countries Are Not Small?

June 1, 2006

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Format: Chicago

Ichiro Tokutsu, and Mika Saito. The Impact of Tradeon Wages: What If Countries Are Not Small?, (USA: International Monetary Fund, 2006) accessed March 13, 2025

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper explores the effect of trade on the relative wage of less-skilled labor through its effect on world prices, which are typically exogenously given under the small open economy assumption. Using the 1995 international input-output data for APEC member countries, we numerically simulate a general equilibrium model to study the effects of abolishing existing tariffs under the assumption that each member country is large enough to affect the prices of goods and services produced in the region. We find that the responsiveness of prices plays an important role in easing a possible adverse effect of trade on relative wages.

Subject: Imports, International trade, Labor, Skilled labor, Tariffs, Taxes, Wage gap, Wages

Keywords: Excess demand, Fall result, Imports, Input price, International Trade, Price change, Price equation, Price movement, Skilled labor, Tariffs, Transportation cost, Unit import cost, Vector of goods, Wage gap, Wages, WP

Publication Details

Pages:

40
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2006/155
Stock No:

WPIEA2006155
ISBN:

9781451864151
ISSN:

1018-5941

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