International Competition, Returns to Skill, and Labor Market Adjustment

Does increased import competition lead to higher returns to skill within an industry and, therefore, to greater incentives for skill acquisition? Does it also induce skill upgrading by the industry’s existing workforce? To answer these questions, t...

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Main Authors:	Falvey, Rod, Greenaway, David, Silva, Joana
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2018
Subjects:	INTERNATIONAL TRADE LABOR MARKET ADJUSTMENT SKILLED LABOR LABOR SKILLS RETURNS TO EDUCATION TRAINING LABOR MARKET TRADE ADJUSTMENT COMPETITIVENESS TRADE LIBERALIZATION TRADE EXPOSURE REAL EXCHANGE RATE
Online Access:	http://documents.worldbank.org/curated/en/872841520954666920/International-competition-returns-to-skill-and-labor-market-adjustment http://hdl.handle.net/10986/29459

id	okr-10986-29459
recordtype	oai_dc
spelling	okr-10986-294592021-06-08T14:42:45Z International Competition, Returns to Skill, and Labor Market Adjustment Falvey, Rod Greenaway, David Silva, Joana INTERNATIONAL TRADE LABOR MARKET ADJUSTMENT SKILLED LABOR LABOR SKILLS RETURNS TO EDUCATION TRAINING LABOR MARKET TRADE ADJUSTMENT COMPETITIVENESS TRADE LIBERALIZATION TRADE EXPOSURE REAL EXCHANGE RATE Does increased import competition lead to higher returns to skill within an industry and, therefore, to greater incentives for skill acquisition? Does it also induce skill upgrading by the industry’s existing workforce? To answer these questions, this paper follows individual workers across skills/occupations, firms, and industries using a longitudinal matched employer-employee data set covering all workers and firms in Portugal over 1986-2000. To identify the effects of international competition the analysis uses two exogenous measures of changes in international competition at the industry level. The first is a quasi-natural experiment based on the strong appreciation of the Portuguese currency during 1989-1992 and preexisting differences in trade exposure across industries in a differences-in-differences estimation. The second is source-weighted real exchange rates defined at the industry level. Based on both empirical strategies, and two definitions of skill, the paper shows that international competition increases returns to skill and induces skill/occupation upgrading within industries. 2018-03-15T15:24:47Z 2018-03-15T15:24:47Z 2018-03 Working Paper http://documents.worldbank.org/curated/en/872841520954666920/International-competition-returns-to-skill-and-labor-market-adjustment http://hdl.handle.net/10986/29459 English Policy Research Working Paper;No. 8365 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Portugal
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	INTERNATIONAL TRADE LABOR MARKET ADJUSTMENT SKILLED LABOR LABOR SKILLS RETURNS TO EDUCATION TRAINING LABOR MARKET TRADE ADJUSTMENT COMPETITIVENESS TRADE LIBERALIZATION TRADE EXPOSURE REAL EXCHANGE RATE
spellingShingle	INTERNATIONAL TRADE LABOR MARKET ADJUSTMENT SKILLED LABOR LABOR SKILLS RETURNS TO EDUCATION TRAINING LABOR MARKET TRADE ADJUSTMENT COMPETITIVENESS TRADE LIBERALIZATION TRADE EXPOSURE REAL EXCHANGE RATE Falvey, Rod Greenaway, David Silva, Joana International Competition, Returns to Skill, and Labor Market Adjustment
geographic_facet	Portugal
relation	Policy Research Working Paper;No. 8365
description	Does increased import competition lead to higher returns to skill within an industry and, therefore, to greater incentives for skill acquisition? Does it also induce skill upgrading by the industry’s existing workforce? To answer these questions, this paper follows individual workers across skills/occupations, firms, and industries using a longitudinal matched employer-employee data set covering all workers and firms in Portugal over 1986-2000. To identify the effects of international competition the analysis uses two exogenous measures of changes in international competition at the industry level. The first is a quasi-natural experiment based on the strong appreciation of the Portuguese currency during 1989-1992 and preexisting differences in trade exposure across industries in a differences-in-differences estimation. The second is source-weighted real exchange rates defined at the industry level. Based on both empirical strategies, and two definitions of skill, the paper shows that international competition increases returns to skill and induces skill/occupation upgrading within industries.
format	Working Paper
author	Falvey, Rod Greenaway, David Silva, Joana
author_facet	Falvey, Rod Greenaway, David Silva, Joana
author_sort	Falvey, Rod
title	International Competition, Returns to Skill, and Labor Market Adjustment
title_short	International Competition, Returns to Skill, and Labor Market Adjustment
title_full	International Competition, Returns to Skill, and Labor Market Adjustment
title_fullStr	International Competition, Returns to Skill, and Labor Market Adjustment
title_full_unstemmed	International Competition, Returns to Skill, and Labor Market Adjustment
title_sort	international competition, returns to skill, and labor market adjustment
publisher	World Bank, Washington, DC
publishDate	2018
url	http://documents.worldbank.org/curated/en/872841520954666920/International-competition-returns-to-skill-and-labor-market-adjustment http://hdl.handle.net/10986/29459
_version_	1764469403725856768

International Competition, Returns to Skill, and Labor Market Adjustment

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