Sticky Feet : How Labor Market Frictions Shape the Impact of International Trade on Jobs and Wages
This report analyzes the paths by which developing country labor markets adjust to permanent trade-related shocks. Trade shocks can bring about reallocation of labor between industries, but the presence of labor mobility costs implies economy-wide...
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| Format: | Publication |
| Language: | English en_US |
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Washington, DC: World Bank
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/06/19705585/sticky-feet-labor-market-frictions-shape-impact-international-trade-jobs-wages http://hdl.handle.net/10986/18777 |
| id |
okr-10986-18777 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACTIVE LABOR ACTIVE LABOR MARKET ACTIVE LABOR MARKET POLICY ADJUSTMENT ASSISTANCE ADJUSTMENT COST ADJUSTMENT POLICIES AGGREGATE EMPLOYMENT AGGREGATE GROWTH AGGREGATE PRODUCTIVITY AGRICULTURE ANALYTICAL APPROACH AVERAGE WAGE AVERAGE WAGES BUSINESS CYCLE CAPITAL INVESTMENT CAPITAL MARKETS CREATIVE DESTRUCTION CRISES DEREGULATION DEVELOPMENT ECONOMICS DISCOUNTED VALUE DISPLACED WORKER DISPLACED WORKERS ECONOMIC COOPERATION ECONOMIC COSTS ECONOMIC FLUCTUATIONS ECONOMIC GROWTH ECONOMIC RESEARCH ECONOMIC SHOCKS ECONOMIC STABILITY EDUCATIONAL ATTAINMENT EMPLOYMENT EMPLOYMENT DYNAMICS EMPLOYMENT GROWTH EMPLOYMENT INCREASES EMPLOYMENT LEVELS EMPLOYMENT OPPORTUNITIES EMPLOYMENT OUTCOMES EMPLOYMENT SHARE ENTRY COSTS EQUILIBRIUM ANALYSIS EQUILIBRIUM UNEMPLOYMENT EXOGENOUS SHOCK EXPECTED WAGES EXPORT MARKETS FACTOR DEMAND FINANCIAL CRISES FINANCIAL CRISIS FIRING COSTS FIRM DYNAMICS FIRM ENTRY FIRM SIZE FORMAL SECTOR WORKERS GDP GDP PER CAPITA GENERAL EQUILIBRIUM GOVERNMENT INTERVENTION HOURS OF WORK HOUSEHOLD SURVEY HOUSEHOLD SURVEYS HUMAN CAPITAL INCOME INDUSTRY WAGE INDUSTRY WAGES INFORMAL EMPLOYMENT INFORMAL SECTOR INSURANCE INTERNATIONAL MARKET INTERNATIONAL MARKETS INTERNATIONAL TRADE JOB CREATION JOB DISPLACEMENT JOB SEARCH JOB SECURITY JOB SEPARATION JOB TURNOVER JOBS LABOR ADJUSTMENT LABOR ADJUSTMENT COSTS LABOR ALLOCATION LABOR ALLOCATIONS LABOR COSTS LABOR DEMAND LABOR ECONOMICS LABOR FORCE LABOR MARKET LABOR MARKET ADJUSTMENT LABOR MARKET CHARACTERISTICS LABOR MARKET IMPACT LABOR MARKET OUTCOMES LABOR MARKET REGULATIONS LABOR MARKET RIGIDITIES LABOR MARKETS LABOR MOBILITY LABOR POLICIES LABOR REALLOCATION LABOR REGULATION LABOR REGULATIONS LABOR SHARE LABOUR LABOUR MARKET LABOUR MARKET REGULATIONS LAID-OFF WORKERS LAYOFFS LEGAL STATUS LOCAL GOVERNMENTS MACROECONOMIC ANALYSIS MICROECONOMIC ANALYSIS MIGRATION NET EMPLOYMENT NEW ENTRANTS NOMINAL WAGES OCCUPATION OCCUPATIONAL CHOICE ON-THE-JOB TRAINING OPEN ECONOMY OPTIMIZATION PASSIVE LABOR PLANT CLOSING PLANT CLOSURE PLANT CLOSURES POLITICAL ECONOMY PREVIOUS STUDIES PREVIOUS WAGE PRODUCTION FUNCTION PRODUCTION WORKERS PRODUCTIVE ACTIVITIES PRODUCTIVITY GAINS PROFITABILITY PURCHASING POWER REAL WAGE REAL WAGES REGRESSION ANALYSIS RETRAINING PROGRAMS SAFETY SAFETY NETS SEARCH COSTS SERVICE SECTOR SEVERANCE PAY SOCIAL CAPITAL SOCIAL DEVELOPMENT SOCIAL SAFETY NETS TOTAL COSTS TRADE LIBERALIZATION TRADE POLICIES TRADE POLICY TRADE REFORMS UNEMPLOYMENT UNEMPLOYMENT BENEFITS WAGE BILL WAGE DATA WAGE DIFFERENTIAL WAGE DIFFERENTIALS WAGE EFFECTS WAGE GAP WAGE INCREASE WAGE LEVEL WAGE SUBSIDIES WELL-FUNCTIONING LABOR MARKETS WORK EXPERIENCE WORKER WORKERS WORKING |
| spellingShingle |
ACTIVE LABOR ACTIVE LABOR MARKET ACTIVE LABOR MARKET POLICY ADJUSTMENT ASSISTANCE ADJUSTMENT COST ADJUSTMENT POLICIES AGGREGATE EMPLOYMENT AGGREGATE GROWTH AGGREGATE PRODUCTIVITY AGRICULTURE ANALYTICAL APPROACH AVERAGE WAGE AVERAGE WAGES BUSINESS CYCLE CAPITAL INVESTMENT CAPITAL MARKETS CREATIVE DESTRUCTION CRISES DEREGULATION DEVELOPMENT ECONOMICS DISCOUNTED VALUE DISPLACED WORKER DISPLACED WORKERS ECONOMIC COOPERATION ECONOMIC COSTS ECONOMIC FLUCTUATIONS ECONOMIC GROWTH ECONOMIC RESEARCH ECONOMIC SHOCKS ECONOMIC STABILITY EDUCATIONAL ATTAINMENT EMPLOYMENT EMPLOYMENT DYNAMICS EMPLOYMENT GROWTH EMPLOYMENT INCREASES EMPLOYMENT LEVELS EMPLOYMENT OPPORTUNITIES EMPLOYMENT OUTCOMES EMPLOYMENT SHARE ENTRY COSTS EQUILIBRIUM ANALYSIS EQUILIBRIUM UNEMPLOYMENT EXOGENOUS SHOCK EXPECTED WAGES EXPORT MARKETS FACTOR DEMAND FINANCIAL CRISES FINANCIAL CRISIS FIRING COSTS FIRM DYNAMICS FIRM ENTRY FIRM SIZE FORMAL SECTOR WORKERS GDP GDP PER CAPITA GENERAL EQUILIBRIUM GOVERNMENT INTERVENTION HOURS OF WORK HOUSEHOLD SURVEY HOUSEHOLD SURVEYS HUMAN CAPITAL INCOME INDUSTRY WAGE INDUSTRY WAGES INFORMAL EMPLOYMENT INFORMAL SECTOR INSURANCE INTERNATIONAL MARKET INTERNATIONAL MARKETS INTERNATIONAL TRADE JOB CREATION JOB DISPLACEMENT JOB SEARCH JOB SECURITY JOB SEPARATION JOB TURNOVER JOBS LABOR ADJUSTMENT LABOR ADJUSTMENT COSTS LABOR ALLOCATION LABOR ALLOCATIONS LABOR COSTS LABOR DEMAND LABOR ECONOMICS LABOR FORCE LABOR MARKET LABOR MARKET ADJUSTMENT LABOR MARKET CHARACTERISTICS LABOR MARKET IMPACT LABOR MARKET OUTCOMES LABOR MARKET REGULATIONS LABOR MARKET RIGIDITIES LABOR MARKETS LABOR MOBILITY LABOR POLICIES LABOR REALLOCATION LABOR REGULATION LABOR REGULATIONS LABOR SHARE LABOUR LABOUR MARKET LABOUR MARKET REGULATIONS LAID-OFF WORKERS LAYOFFS LEGAL STATUS LOCAL GOVERNMENTS MACROECONOMIC ANALYSIS MICROECONOMIC ANALYSIS MIGRATION NET EMPLOYMENT NEW ENTRANTS NOMINAL WAGES OCCUPATION OCCUPATIONAL CHOICE ON-THE-JOB TRAINING OPEN ECONOMY OPTIMIZATION PASSIVE LABOR PLANT CLOSING PLANT CLOSURE PLANT CLOSURES POLITICAL ECONOMY PREVIOUS STUDIES PREVIOUS WAGE PRODUCTION FUNCTION PRODUCTION WORKERS PRODUCTIVE ACTIVITIES PRODUCTIVITY GAINS PROFITABILITY PURCHASING POWER REAL WAGE REAL WAGES REGRESSION ANALYSIS RETRAINING PROGRAMS SAFETY SAFETY NETS SEARCH COSTS SERVICE SECTOR SEVERANCE PAY SOCIAL CAPITAL SOCIAL DEVELOPMENT SOCIAL SAFETY NETS TOTAL COSTS TRADE LIBERALIZATION TRADE POLICIES TRADE POLICY TRADE REFORMS UNEMPLOYMENT UNEMPLOYMENT BENEFITS WAGE BILL WAGE DATA WAGE DIFFERENTIAL WAGE DIFFERENTIALS WAGE EFFECTS WAGE GAP WAGE INCREASE WAGE LEVEL WAGE SUBSIDIES WELL-FUNCTIONING LABOR MARKETS WORK EXPERIENCE WORKER WORKERS WORKING Hollweg, Claire H. Lederman, Daniel Rojas, Diego Ruppert Bulmer, Elizabeth Sticky Feet : How Labor Market Frictions Shape the Impact of International Trade on Jobs and Wages |
| geographic_facet |
Brazil Costa Rica Mexico Morocco |
| relation |
Directions in Development--Trade; |
| description |
This report analyzes the paths by which
developing country labor markets adjust to permanent
trade-related shocks. Trade shocks can bring about
reallocation of labor between industries, but the presence
of labor mobility costs implies economy-wide losses because
they extend the period of economic adjustment. This report
focuses primarily on the adjustment costs faced by workers
after a trade shock, because of magnitude and welfare
implications and policy relevance. From a policy viewpoint,
understanding the relative magnitudes of labor mobility and
adjustment costs can help policymakers design trade policies
that are consistent with employment objectives, can be
complemented by labor policies, or support programs to
facilitate labor transitions, or both. To complement and
validate the analysis based on structural choice models, the
study designed a distinct empirical approach using
reduced-form econometric estimation strategies. This
approach examines the impact of structural reforms and
worker displacement on labor market outcomes. This makes it
possible to estimate the time required to adjust to a
trade-related shock, but does not assume the rigid
underlying relationship inherent in structural models. This
report is organized as follows: chapter one gives
introduction. Chapter two presents evidence from the
literature on the relative magnitude of labor adjustment
costs borne by workers and by firms. Chapter three presents
a new database of country-level labor mobility cost
estimates for both developing and developed economies.
Chapter four showcases country case studies in which labor
mobility costs vary by industry, firm size, and worker type
(for example, informal versus. formal). Chapter five
analyzes the impact of structural reforms on aggregate labor
market outcomes across countries and the effect of worker
displacement due to plant closings on the employment
outcomes of individual workers in Mexico. Chapter six
concludes with a summary of the main findings about the
labor adjustment costs associated with trade-related shocks
and a discussion of policy responses internationally. |
| format |
Publications & Research :: Publication |
| author |
Hollweg, Claire H. Lederman, Daniel Rojas, Diego Ruppert Bulmer, Elizabeth |
| author_facet |
Hollweg, Claire H. Lederman, Daniel Rojas, Diego Ruppert Bulmer, Elizabeth |
| author_sort |
Hollweg, Claire H. |
| title |
Sticky Feet : How Labor Market Frictions Shape the Impact of International Trade on Jobs and Wages |
| title_short |
Sticky Feet : How Labor Market Frictions Shape the Impact of International Trade on Jobs and Wages |
| title_full |
Sticky Feet : How Labor Market Frictions Shape the Impact of International Trade on Jobs and Wages |
| title_fullStr |
Sticky Feet : How Labor Market Frictions Shape the Impact of International Trade on Jobs and Wages |
| title_full_unstemmed |
Sticky Feet : How Labor Market Frictions Shape the Impact of International Trade on Jobs and Wages |
| title_sort |
sticky feet : how labor market frictions shape the impact of international trade on jobs and wages |
| publisher |
Washington, DC: World Bank |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2014/06/19705585/sticky-feet-labor-market-frictions-shape-impact-international-trade-jobs-wages http://hdl.handle.net/10986/18777 |
| _version_ |
1764442794163699712 |
| spelling |
okr-10986-187772021-04-23T14:03:49Z Sticky Feet : How Labor Market Frictions Shape the Impact of International Trade on Jobs and Wages Hollweg, Claire H. Lederman, Daniel Rojas, Diego Ruppert Bulmer, Elizabeth ACTIVE LABOR ACTIVE LABOR MARKET ACTIVE LABOR MARKET POLICY ADJUSTMENT ASSISTANCE ADJUSTMENT COST ADJUSTMENT POLICIES AGGREGATE EMPLOYMENT AGGREGATE GROWTH AGGREGATE PRODUCTIVITY AGRICULTURE ANALYTICAL APPROACH AVERAGE WAGE AVERAGE WAGES BUSINESS CYCLE CAPITAL INVESTMENT CAPITAL MARKETS CREATIVE DESTRUCTION CRISES DEREGULATION DEVELOPMENT ECONOMICS DISCOUNTED VALUE DISPLACED WORKER DISPLACED WORKERS ECONOMIC COOPERATION ECONOMIC COSTS ECONOMIC FLUCTUATIONS ECONOMIC GROWTH ECONOMIC RESEARCH ECONOMIC SHOCKS ECONOMIC STABILITY EDUCATIONAL ATTAINMENT EMPLOYMENT EMPLOYMENT DYNAMICS EMPLOYMENT GROWTH EMPLOYMENT INCREASES EMPLOYMENT LEVELS EMPLOYMENT OPPORTUNITIES EMPLOYMENT OUTCOMES EMPLOYMENT SHARE ENTRY COSTS EQUILIBRIUM ANALYSIS EQUILIBRIUM UNEMPLOYMENT EXOGENOUS SHOCK EXPECTED WAGES EXPORT MARKETS FACTOR DEMAND FINANCIAL CRISES FINANCIAL CRISIS FIRING COSTS FIRM DYNAMICS FIRM ENTRY FIRM SIZE FORMAL SECTOR WORKERS GDP GDP PER CAPITA GENERAL EQUILIBRIUM GOVERNMENT INTERVENTION HOURS OF WORK HOUSEHOLD SURVEY HOUSEHOLD SURVEYS HUMAN CAPITAL INCOME INDUSTRY WAGE INDUSTRY WAGES INFORMAL EMPLOYMENT INFORMAL SECTOR INSURANCE INTERNATIONAL MARKET INTERNATIONAL MARKETS INTERNATIONAL TRADE JOB CREATION JOB DISPLACEMENT JOB SEARCH JOB SECURITY JOB SEPARATION JOB TURNOVER JOBS LABOR ADJUSTMENT LABOR ADJUSTMENT COSTS LABOR ALLOCATION LABOR ALLOCATIONS LABOR COSTS LABOR DEMAND LABOR ECONOMICS LABOR FORCE LABOR MARKET LABOR MARKET ADJUSTMENT LABOR MARKET CHARACTERISTICS LABOR MARKET IMPACT LABOR MARKET OUTCOMES LABOR MARKET REGULATIONS LABOR MARKET RIGIDITIES LABOR MARKETS LABOR MOBILITY LABOR POLICIES LABOR REALLOCATION LABOR REGULATION LABOR REGULATIONS LABOR SHARE LABOUR LABOUR MARKET LABOUR MARKET REGULATIONS LAID-OFF WORKERS LAYOFFS LEGAL STATUS LOCAL GOVERNMENTS MACROECONOMIC ANALYSIS MICROECONOMIC ANALYSIS MIGRATION NET EMPLOYMENT NEW ENTRANTS NOMINAL WAGES OCCUPATION OCCUPATIONAL CHOICE ON-THE-JOB TRAINING OPEN ECONOMY OPTIMIZATION PASSIVE LABOR PLANT CLOSING PLANT CLOSURE PLANT CLOSURES POLITICAL ECONOMY PREVIOUS STUDIES PREVIOUS WAGE PRODUCTION FUNCTION PRODUCTION WORKERS PRODUCTIVE ACTIVITIES PRODUCTIVITY GAINS PROFITABILITY PURCHASING POWER REAL WAGE REAL WAGES REGRESSION ANALYSIS RETRAINING PROGRAMS SAFETY SAFETY NETS SEARCH COSTS SERVICE SECTOR SEVERANCE PAY SOCIAL CAPITAL SOCIAL DEVELOPMENT SOCIAL SAFETY NETS TOTAL COSTS TRADE LIBERALIZATION TRADE POLICIES TRADE POLICY TRADE REFORMS UNEMPLOYMENT UNEMPLOYMENT BENEFITS WAGE BILL WAGE DATA WAGE DIFFERENTIAL WAGE DIFFERENTIALS WAGE EFFECTS WAGE GAP WAGE INCREASE WAGE LEVEL WAGE SUBSIDIES WELL-FUNCTIONING LABOR MARKETS WORK EXPERIENCE WORKER WORKERS WORKING This report analyzes the paths by which developing country labor markets adjust to permanent trade-related shocks. Trade shocks can bring about reallocation of labor between industries, but the presence of labor mobility costs implies economy-wide losses because they extend the period of economic adjustment. This report focuses primarily on the adjustment costs faced by workers after a trade shock, because of magnitude and welfare implications and policy relevance. From a policy viewpoint, understanding the relative magnitudes of labor mobility and adjustment costs can help policymakers design trade policies that are consistent with employment objectives, can be complemented by labor policies, or support programs to facilitate labor transitions, or both. To complement and validate the analysis based on structural choice models, the study designed a distinct empirical approach using reduced-form econometric estimation strategies. This approach examines the impact of structural reforms and worker displacement on labor market outcomes. This makes it possible to estimate the time required to adjust to a trade-related shock, but does not assume the rigid underlying relationship inherent in structural models. This report is organized as follows: chapter one gives introduction. Chapter two presents evidence from the literature on the relative magnitude of labor adjustment costs borne by workers and by firms. Chapter three presents a new database of country-level labor mobility cost estimates for both developing and developed economies. Chapter four showcases country case studies in which labor mobility costs vary by industry, firm size, and worker type (for example, informal versus. formal). Chapter five analyzes the impact of structural reforms on aggregate labor market outcomes across countries and the effect of worker displacement due to plant closings on the employment outcomes of individual workers in Mexico. Chapter six concludes with a summary of the main findings about the labor adjustment costs associated with trade-related shocks and a discussion of policy responses internationally. 2014-06-26T15:26:21Z 2014-06-26T15:26:21Z 2014-06-17 http://documents.worldbank.org/curated/en/2014/06/19705585/sticky-feet-labor-market-frictions-shape-impact-international-trade-jobs-wages 978-1-4648-0263-8 10.1596/978-1-4648-0263-8 http://hdl.handle.net/10986/18777 English en_US Directions in Development--Trade; CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ Washington, DC: World Bank Publications & Research :: Publication Brazil Costa Rica Mexico Morocco |