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Research Paper WTO Working Papers ERSD-2017-15

Trade, technology, and prosperity: an account of evidence from a labor-market perspective

Authors

Publication date

Nov 2017

Summary

This report assesses the state of economic research into those areas, with a particular focus on empirical methodologies and their adequacy for an assessment of general-equilibrium outcomes. While difference-in-differences techniques and instrumental- variable approaches provide answers, they exhibit shortcomings that limit conclusiveness. Recent advances in structural estimation of multi-country and multisector models that allow for reallocation frictions in domestic labor markets hold promise to deliver more definite empirical answers. Interestingly, a conclusion from a two-decades old strand of literature seems to be vindicated by conclusions from a related recent literature: roughly one-quarter of changes in labor-market outcomes (wage inequality then and manufacturing job losses now) was predicted by trade integration and roughly one-third by technological change. The remainder of changes in labor-market outcomes remains unaccounted. The report offers candidate explanations, rooted in recent evidence, how interactions between globalization, technological progress, and structural change may account for that remainder.

Subjects

Science And Technology, Labour Market, Economics, Research, Wages And Earnings, and International Economic Relations

Links

https://www.wto.org/english/res_e/reser_e/ersd201715_e.htm

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