| Title:
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STICKY FEET
HOW LABOR MARKET FRICTIONS SHAPE THE IMPACT OF INTERNATIONAL TRADE ON JOBS AND WAGES |
| By: |
Claire Hollweg, World Bank, Daniel Lederman |
| Format: |
Paperback |
| List price:
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£26.50 |
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| ISBN 10: |
1464802637 |
| ISBN 13: |
9781464802638 |
| Publisher: |
WORLD BANK PUBLICATIONS |
| Pub. date: |
19 June, 2014 |
| Series: |
Directions in Development |
| Pages: |
120 |
| Description: |
This report quantifies labour mobility costs in developing countries and simulates the implied adjustment paths of employment and wages following a change in trade policy. High mobility costs are shown to reduce the potential gains to trade reform. |
| Synopsis: |
The analysis in this report confirms the findings of previous studies that trade liberalization improves aggregate welfare and is in the long run associated with higher employment and wages. The analysis addresses a major gap in the literature, which has heretofore provided limited evidence about the trade-related adjustment costs faced by workers in developing countries and how they are affected by mobility costs. Labor market frictions reduce the potential gains from trade reform. For a tariff reduction in a given sector, the resulting change in relative prices raises real wages in some sectors and reduces them in the liberalized sector. The emerging wage gaps lead to labor reallocation. But workers typically incur costs to change jobs; the higher the mobility costs, the slower the transition to the new labor market steady state. Workers' sticky feet result in foregone welfare gains from trade. This report presents an estimation strategy for capturing mobility costs when only net flows of workers between industries are observed, generating cross-country estimates for 47 developed and developing countries.The basic analytical approach is then refined to take advantage of micro-level data on worker transitions and wages when gross flows can be observed to derive mobility cost estimates that account for sector and formality status. These cost estimates are used to model the dynamic paths of labor reallocation between sectors and in and out of the labor force, the associated wage paths, and the resulting labor adjustment costs |
| Publication: |
US |
| Imprint: |
World Bank Publications |
| Returns: |
Non-returnable |