Trade Liberalisation and Human Capital Adjustment

This paper highlights the way in which workers of different ages and abilities are affected by anticipated and unanticipated trade liberalisations. A two-factor (skilled and unskilled labour), two-sector Heckscher-Ohlin trade model is supplemented with an education sector which uses skilled labour a...

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Main Authors:	Falvey, Rod, Greenaway, David, Silva, Joana
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Neoclassical Models of Trade F110 Trade Policy International Trade Organizations F130 Trade and Labor Market Interactions F160 Human Capital Skills Occupational Choice Labor Productivity J240
Online Access:	http://hdl.handle.net/10986/5712

id	okr-10986-5712
recordtype	oai_dc
spelling	okr-10986-57122021-04-23T14:02:23Z Trade Liberalisation and Human Capital Adjustment Falvey, Rod Greenaway, David Silva, Joana Neoclassical Models of Trade F110 Trade Policy International Trade Organizations F130 Trade and Labor Market Interactions F160 Human Capital Skills Occupational Choice Labor Productivity J240 This paper highlights the way in which workers of different ages and abilities are affected by anticipated and unanticipated trade liberalisations. A two-factor (skilled and unskilled labour), two-sector Heckscher-Ohlin trade model is supplemented with an education sector which uses skilled labour and time to convert unskilled workers into skilled workers. A skilled worker's income depends on her ability, but all unskilled workers have the same income. Trade liberalisation in a relatively skilled labour abundant country increases the relative skilled wage and induces skill upgrading by the existing workforce, with younger and more able unskilled workers most likely to upgrade. But not all upgraders are better off as a result of the liberalisation. The older and less able upgraders are likely to lose. For an anticipated liberalisation we show that the preferred upgrading strategies depend on a worker's ability and that much of the upgrading will take place before the liberalisation. Hence some workers who would have upgraded had they anticipated the liberalisation will not if it is unanticipated, and adjustment assistance that applies only to post-liberalisation upgraders will fail to compensate some losers and distort the upgrading decisions of others. 2012-03-30T07:34:10Z 2012-03-30T07:34:10Z 2010 Journal Article Journal of International Economics 00221996 http://hdl.handle.net/10986/5712 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Neoclassical Models of Trade F110 Trade Policy International Trade Organizations F130 Trade and Labor Market Interactions F160 Human Capital Skills Occupational Choice Labor Productivity J240
spellingShingle	Neoclassical Models of Trade F110 Trade Policy International Trade Organizations F130 Trade and Labor Market Interactions F160 Human Capital Skills Occupational Choice Labor Productivity J240 Falvey, Rod Greenaway, David Silva, Joana Trade Liberalisation and Human Capital Adjustment
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	This paper highlights the way in which workers of different ages and abilities are affected by anticipated and unanticipated trade liberalisations. A two-factor (skilled and unskilled labour), two-sector Heckscher-Ohlin trade model is supplemented with an education sector which uses skilled labour and time to convert unskilled workers into skilled workers. A skilled worker's income depends on her ability, but all unskilled workers have the same income. Trade liberalisation in a relatively skilled labour abundant country increases the relative skilled wage and induces skill upgrading by the existing workforce, with younger and more able unskilled workers most likely to upgrade. But not all upgraders are better off as a result of the liberalisation. The older and less able upgraders are likely to lose. For an anticipated liberalisation we show that the preferred upgrading strategies depend on a worker's ability and that much of the upgrading will take place before the liberalisation. Hence some workers who would have upgraded had they anticipated the liberalisation will not if it is unanticipated, and adjustment assistance that applies only to post-liberalisation upgraders will fail to compensate some losers and distort the upgrading decisions of others.
format	Journal Article
author	Falvey, Rod Greenaway, David Silva, Joana
author_facet	Falvey, Rod Greenaway, David Silva, Joana
author_sort	Falvey, Rod
title	Trade Liberalisation and Human Capital Adjustment
title_short	Trade Liberalisation and Human Capital Adjustment
title_full	Trade Liberalisation and Human Capital Adjustment
title_fullStr	Trade Liberalisation and Human Capital Adjustment
title_full_unstemmed	Trade Liberalisation and Human Capital Adjustment
title_sort	trade liberalisation and human capital adjustment
publishDate	2012
url	http://hdl.handle.net/10986/5712
_version_	1764396047604383744

Trade Liberalisation and Human Capital Adjustment

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