Trade, Jobs, and Inequality

44 Pages Posted: 4 Feb 2022

See all articles by kim Beaton

kim Beaton

Independent

Valerie Cerra

International Monetary Fund (IMF)

Metodij Hadzi-Vaskov

International Monetary Fund (IMF)

Date Written: July 1, 2021

Abstract

This paper examines the impact of trade on employment, wages, and other outcomes across countries and explores the conditions and policies that help spread the gains from trade more evenly throughout the population. We exploit a large global firm-level dataset to examine the impact of import competition on employment, wages, and firm performance, as well as the firm, industry, and country factors that mitigate any negative impact of an import shock. In contrast to the results of some well-known single-country studies, we find limited adverse impact of import competition. In some countries and industries, import competition actually strengthens employment growth. In addition, import competition tends to improve average wages, investment, and firm profitability. Country characteristics, such as educational attainment, can also improve employment prospects in response to trade shocks. Finally, we find that firms experiencing greater import competition start with higher average wages; thus any relatively slower employment growth in this group of firms could lead to lower inequality.

Keywords: import competition, employment growth, import shock, firm investment, firm profitability, Imports, Employment, Competition, Wages, Income inequality, Global

JEL Classification: F14, F15, F16, F43, I30, O1, O57, F10, E24, G10, J30, E25

Suggested Citation

Beaton, kim and Cerra, Valerie and Hadzi-Vaskov, Metodij, Trade, Jobs, and Inequality (July 1, 2021). IMF Working Paper No. 2021/178, Available at SSRN: https://ssrn.com/abstract=4026377

Valerie Cerra

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-8596 (Phone)

Metodij Hadzi-Vaskov

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
51
Abstract Views
352
Rank
712,917
PlumX Metrics