Trade, Jobs, and Inequality

By Kimberly Beaton, Valerie Cerra, Metodij Hadzi-Vaskov

July 1, 2021

Preview Citation

Format: Chicago

Kimberly Beaton, Valerie Cerra, and Metodij Hadzi-Vaskov. Trade, Jobs, and Inequality, (USA: International Monetary Fund, 2021) accessed November 9, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper examines the impact of trade on employment, wages, and other outcomes across countries and explores the conditions and policies that help spread the gains from trade more evenly throughout the population. We exploit a large global firm-level dataset to examine the impact of import competition on employment, wages, and firm performance, as well as the firm, industry, and country factors that mitigate any negative impact of an import shock. In contrast to the results of some well-known single-country studies, we find limited adverse impact of import competition. In some countries and industries, import competition actually strengthens employment growth. In addition, import competition tends to improve average wages, investment, and firm profitability. Country characteristics, such as educational attainment, can also improve employment prospects in response to trade shocks. Finally, we find that firms experiencing greater import competition start with higher average wages; thus any relatively slower employment growth in this group of firms could lead to lower inequality.

Subject: Competition, Employment, Financial markets, Imports, Income inequality, International trade, Labor, National accounts, Wages

Keywords: Competition, Employment, Employment growth, Firm investment, Firm profitability, Global, Import competition, Import shock, Imports, Income inequality, Wages

Publication Details

Pages:

44
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2021/178
Stock No:

WPIEA2021178
ISBN:

9781513584355
ISSN:

1018-5941

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