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The authors link industry-level data on trade and offshoring with individual-level worker data from the Current Population Surveys. They find that occupational exposure to globalization is associated with larger wage effects than industry exposure. This effect has been overlooked because it operates between rather than within sectors of the economy. The authors also find that globalization is associated with a reallocation of workers across sectors and occupations. They estimate wage losses of 2 to 4 percent among workers leaving manufacturing and 4 to 11 percent among workers who also switch occupations. These effects are most pronounced for workers who perform routine tasks.

Economic Integration --- Trade and Labor Market Interactions --- Multinational Firms • International Business --- Labor Demand

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"This paper studies empirically the relationship between trade policy and individual income risk faced by workers, and uses the estimates of this empirical analysis to evaluate the welfare effect of trade reform. The analysis proceeds in three steps. First, longitudinal data on workers are used to estimate time-varying individual income risk parameters in various manufacturing sectors. Second, the estimated income risk parameters and data on trade barriers are used to analyze the relationship between trade policy and income risk. Finally, a simple dynamic incomplete-market model is used to assess the corresponding welfare costs. In the implementation of this methodology using Mexican data, we find that trade policy changes have a significant short run effect on income risk. Further, while the tariff level has an insignificant mean effect, it nevertheless changes the degree to which macroeconomic shocks affect income risk"--National Bureau of Economic Research web site.

Trade Policy • International Trade Organizations --- Trade and Labor Market Interactions --- Incomplete Markets --- Consumption • Saving • Wealth --- Mexico --- Commercial policy.

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Informal employment is ubiquitous in developing countries, but few studies have estimated workers' switching costs between informal and formal employment. This paper builds on the empirical literature grounded in discrete choice models to estimate these costs. The results suggest that inter-industry labor mobility costs are large, but entry costs into informal employment are significantly lower than the costs of entry in formal employment. Simulations of labor-market adjustments caused by a trade-related fall in manufacturing goods prices indicate that the share of informally employed workers rises after liberalization, but this is due to entry into the labor market by previously idle labor.

Economic Theory & Research --- Informal Economy --- International Economics & Trade --- Labor Markets --- Labor Policies --- Labor Standards --- Macroeconomics and Economic Growth --- Poverty Reduction --- Trade and Labor Market Interactions --- Trade Policy --- Work & Working Conditions

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The quality of institutions-meaning the quality of contract enforcement, property rights, shareholder protection, and the like-has received a great deal of attention in recent years. The purposes of this paper are twofold. First, it studies the consequences of trade when institutional differences are the source of comparative advantage among countries. Institutional differences are modeled within the Grossman-Hart-Moore framework of contract incompleteness. It is shown, among other things, that the less developed country may not gain from trade, and that factor prices may actually diverge as a result of trade. Second, the paper provides empirical evidence of "institutional content of trade:" institutional differences are shown to be important determinant of trade flows.

Comparative advantage (International trade) --- Comparative advantage (Commerce) --- Comparative costs (International trade) --- International trade --- Heckscher-Ohlin principle --- International division of labor --- Econometric models. --- Exports and Imports --- Macroeconomics --- Production and Operations Management --- Neoclassical Models of Trade --- Empirical Studies of Trade --- Trade and Labor Market Interactions --- Labor Economics: General --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Trade: General --- International economics --- Labour --- income economics --- Labor --- Capital productivity --- Imports --- Comparative advantage --- Trade balance --- Production --- Labor economics --- Balance of trade --- United States --- Income economics

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When does trade become a one-way relationship? We study bilateral trade balances for a sample of 18 European countries over the period from 1948 through 2008. We find that, with the introduction of the euro, trade imbalances among euro area members widened considerably, even after allowing for permanent asymmetries in trade competitiveness within pairs of countries or in the overall trade competitiveness of individual countries. This is consistent with indications that pair-wise trade tends to be more balanced when nominal exchange rates are flexible. Intra-euro area imbalances also seem to have become more persistent with the introduction of the euro, some of which is linked to labor market inflexibility. Reviewing the direction of imbalances, we find that bilateral trade surpluses are decreasing in the real exchange rate, decreasing in growth differentials, and increasing in the relative volatility of national business cycles. Finally, countries with relatively higher fiscal deficits and less flexible labor and product markets exhibit systematically lower trade surpluses than others.

Balance of trade. --- Euro. --- Deficits, Trade --- Trade, Balance of --- Trade balance --- Trade deficits --- Trade surpluses --- Surpluses, Trade --- International trade --- Balance of payments --- Mercantile system --- Payment --- Money --- Exports and Imports --- Foreign Exchange --- Economic Integration --- Trade and Labor Market Interactions --- Current Account Adjustment --- Short-term Capital Movements --- Financial Aspects of Economic Integration --- International Policy Coordination and Transmission --- Empirical Studies of Trade --- Trade Policy --- International Trade Organizations --- International economics --- Currency --- Foreign exchange --- Plurilateral trade --- Exchange rates --- Balance of trade --- Iceland