Schooled by Trade? Retraining and Import Competition

48 Pages Posted: 30 Jan 2022 Last revised: 28 Oct 2022

See all articles by Trevor Williams

Trevor Williams

Yale University, Department of Economics, Students

Lucas Conwell

University College London - Department of Economics

Date Written: January 26, 2022

Abstract

Retraining is often hailed as a key policy tool to support workers displaced by import competition, yet there is surprisingly little evidence on whether these policies achieve their intended effects. Using administrative data from Germany, a highly open economy with extensive government-subsidized retraining programs, we provide evidence that workers routinely retrain in response to import competition. To quantify the welfare impact of retraining policies, we propose a search model in which heterogeneous workers may choose to retrain while unemployed. Retraining enables workers to change their job-finding rates and their productivity while employed. We find that retraining increases the gains from trade by 7% in the aggregate. Some worker groups gain five times as much, while others gain virtually nothing.

Keywords: Retraining, trade adjustment, unemployment

JEL Classification: F16, F66, J24

Suggested Citation

Williams, Trevor and Conwell, Lucas, Schooled by Trade? Retraining and Import Competition (January 26, 2022). Available at SSRN: https://ssrn.com/abstract=4018568 or http://dx.doi.org/10.2139/ssrn.4018568

Trevor Williams (Contact Author)

Yale University, Department of Economics, Students ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

Lucas Conwell

University College London - Department of Economics ( email )

Drayton House, 30 Gordon Street
30 Gordon Street
London, WC1H 0AX
United Kingdom

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