Who's Afraid of Virginia Wu? The Labor Composition and Labor Gains of Trade

41 Pages Posted: 28 Feb 2019

See all articles by Timon Bohn

Timon Bohn

University of Groningen

Steven Brakman

University of Groningen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Erik Dietzenbacher

University of Groningen - Department of Economics

Date Written: 2019

Abstract

There are various ways to indicate the importance of international trade. In this paper, we use the ‘labor footprint’ concept to gain new insights into the implications of trade for employment. We focus on the US, but also provide information on 39 other, mostly developed, countries for the period 1995-2008. We show that US consumption increasingly depends on foreign workers. At the same time, US labor has benefited from new jobs generated by the world economy, especially in the services sector. Next we compare labor footprints with labor endowments to evaluate the capacity of countries to be self-sufficient in terms of labor in a hypothetical situation of autarky and perfect labor mobility. This counterfactual exercise reveals that most countries in our study are able to produce all output for consumption themselves. However, once the assumption that labor is perfectly mobile across skill levels and that all unemployed workers accept a job when offered one is relaxed, most countries can no longer be self-sufficient. That is, these countries would not be able to sustain their current consumption pattern.

Keywords: factor content of trade, input-output analysis

JEL Classification: F200

Suggested Citation

Bohn, Timon and Brakman, Steven and Dietzenbacher, Erik, Who's Afraid of Virginia Wu? The Labor Composition and Labor Gains of Trade (2019). CESifo Working Paper No. 7527. Available at SSRN: https://ssrn.com/abstract=3343859

Timon Bohn (Contact Author)

University of Groningen

P.O. Box 800
9700 AH Groningen, Groningen 9700 AV
Netherlands

Steven Brakman

University of Groningen - Department of Economics ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
+31 50 363 3746 (Phone)
+31 50 363 3730 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Erik Dietzenbacher

University of Groningen - Department of Economics ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
+31 (0)50 3633813 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
7
Abstract Views
52
PlumX Metrics