2. In the case of Mexico, Robertson (2004) shows that, following substantial tariff reductions as part of the General Agreement on Tariffs and Trade reforms in 1986, the unskilled sector took the hardest hit in terms of wages and employment in the short run, contrary to the predictions of the S-S theorem (Stolper and Samuelson 1941). This trending increase in wage inequality that occurred in the short term, however, reversed itself after deeper integration reforms in the 1990s driven by a decline in relative wages of skilled workers. 3. It is important to differentiate between ex post general equilibrium studies and ex ante computable general equilibrium (CGE) simulation studies projecting future outcomes. A review of these can be found in Cirera, Willenbockel, and Lakshman (2014), who compare the findings of ex post econometric studies with ex ante CGE simulation studies. In the case of the latter, a reallocation of factors is assumed to happen, resulting in generally positive impacts from trade liberalization on employment. 4. As discussed in detail by Artuç and McLaren (2015), most studies in the 1990s and early 2000s analyze the effect of trade changes on labor based on the physical or human capital of workers in line with the S-S theorem. As the understanding of the distributional impacts of trade became more dynamic, other factors like industry affiliation and the age of workers became more important. Thus, several studies in the mid 2000s take approaches that analyze impact on workers based on industry of employment (such as Artuç, Chaudhuri, and McLaren 2010; Pavcnik et al. 2004) and age (such as Artuç 2012). Others focus on occupations (such as Autor, Levy, and Murnane 2003; Ebenstein et al. 2014). 5. Hoekman and Porto (2010) provide an overview of adjustment costs to trade in low-income countries with large informal and agricultural that go beyond labor costs. 6. Atkin and Khandelwal (2020) provide a detailed review of literature that assesses how distortions such as the presence of weak institutions and market failures alter the impacts of trade reforms in developed and developing countries.
References Acemoglu, Daron, David Autor, David Dorn, Gordon Hanson, and Brendan Price. 2016. “Import Competition and the Great US Employment Sag of the 2000s.” Journal of Labor Economics 34 (S1): S141–98. Adão, Rodrigo. 2016, “Worker Heterogeneity, Wage Inequality, and International Trade: Theory and Evidence from Brazil.” Working paper, Massachusetts Institute of Technology, Cambridge, MA. Adão, Rodrigo, Costas Arkolakis, and Federico Esposito. 2019. “Spatial Linkages, Global Shocks, and Local Labor Markets: Theory and Evidence.” Discussion Paper 2163, Cowles Foundation for Research in Economics, Yale University, New Haven, CT. Agustina, Fina. 2018. “Import Competition and Local Labor Markets: the Case of Indonesia.” Economic Journal of Emerging Markets 10 (2): 177–86. Arias, Javier, Erhan Artuç, Daniel Lederman, and Diego Rojas. 2018. “Trade, Informal Employment, and Labor Adjustment Costs.” Journal of Development Economics. 133 (C): 396–414. Artuç, Erhan, 2012. “Workers’ Age and the Impact of Trade Shocks.” Policy Research Working Paper 6035, World Bank, Washington, DC. Artuç, Erhan, Shubham Chaudhuri, and John McLaren. 2010. “Trade Shocks and Labor Adjustment: A Structural Empirical Approach.” American Economic Review, 100 (3): 1008–45. Artuç, Erhan, Gladys Lopez-Acevedo, Raymond Robertson, and Daniel Samaan. 2019. Exports to Jobs: Boosting the Gains from Trade in South Asia. Washington, DC: World Bank. Artuç, Erhan, and John McLaren. 2010. “A Structural Empirical Approach to Trade Shocks and Labor Adjustment: An Application to Turkey.” In Trade Adjustment Costs in Developing Countries and
44
The Distributional Impacts of Trade
