Trade and Wages: Insights from the Crystal Ball / Robert Z. Lawrence, Carolyn L. Evans.

Format:

Book

Author/Creator:

Lawrence, Robert Z.

Contributor:

National Bureau of Economic Research.

Evans, Carolyn L.

Series:

Working Paper Series (National Bureau of Economic Research) no. w5633.

NBER working paper series no. w5633

Language:

English

Subjects (All):

Foreign trade and employment--United States.

Foreign trade and employment.

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Trade and Wages

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1996.

Cambridge, Mass : National Bureau of Economic Research, 1996.

Summary:

This study uses both a net factor content analysis and a small simulation model to explore the impact on the U.S. labor market of a fivefold increase in imports of manufactured goods from developing countries. The simulation, which is parameterized by the US economy in 1990, involves a balanced trade expansion which displaces almost half of US manufacturing workers who are reemployed in the remaining manufacturing and non-trade sectors. The results show that relative wages of workers with a high school education or less would be depressed, while those with some college education would rise. However, despite the magnitude of the shock, the effects are surprisingly small. Once account is taken of productivity increases, labor force growth and export sector wage premiums, given unitary elasticities of demand and of substitution between workers with different levels of education, relative wages of workers with some college education rise by 3.5 percent, while the real wages of workers with a high school education or less decline by 1.3 percent. The impact of a variety of parameter assumptions is also explored.

Notes:

Print version record

June 1996.