Tagged: Labour

Factor proportions and the growth of world trade

Most of the expansion of global trade since 1980 has been of the North–South kind — between capital-abundant developed and labour-abundant developing countries. Based on this observation, I argue that the recent growth of world trade is best understood from a factor-proportions perspective. Using data on trade barriers and estimates of capital–labour ratios for a group of 45 economies between 1980 and 2008, I find that a calibrated factor-proportions model can generate significant trade growth during this period, amounting to 90% of the observed rise in North–South trade. The opening up of China alone accounts for three quarters of the predicted increase. In line with the model, I present evidence that China’s liberalisation has raised the exports and imports of capital-abundant countries relative to more labour-abundant economies. Overall, my findings suggest that factor-proportions theory may be useful for interpreting several quantitative and qualitative aspects of growing world trade in a period during which the group of large, open economies has become significantly less homogenous.

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How Foreign Aid Inflows Moderate the Effect of Bilateral Trade Pressures on Labor Rights

This paper investigates how foreign aid inflows moderate bilateral trade-based pressures on the exporting countries’ labor rights. Because aid provides additional resources to recipient governments, it reduces the importance aid-recipient governments attach to the preferences of their export partners. Consequently, aid inadvertently moderates the leverage exercised by importing countries on the governments of exporting, developing countries. Our analysis of a panel of 91 aid recipient countries for the period 1985–2002 lends support to the “revenue substitution” hypothesis. When aid levels are low, bilateral trade-based pressures are associated with improved labor rights. As aid levels rise, however, the effect loses significance.

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How important are exports for job growth in China? A demand side analysis

We analyze the impact of foreign demand on Chinese employment creation by extending the global input–output methodology introduced by Johnson and Noguera (2012). We find that between 1995 and 2001, fast growth in foreign demand was offset by strong increases in labor productivity and the net effect on employment was nil. Between 2001 and 2006, booming foreign demand added about 70 million jobs. These jobs were overridingly for workers with only primary education. Since 2006 growth in domestic demand for non-tradables has become more important for job creation than foreign demand, signaling a rebalancing of the Chinese economy.

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Skills and changing comparative advantage : the case of Japan

Is the skill gap of net exports widening? This question is nontrivial for many industrial countries because, with the rapid growth of emerging countries, human capital is considered one of the most important sources of comparative advantage.

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The impacts of trade liberalization on informal labor markets: a theoretical and empirical evaluation of the Brazilian case / Lourenco S. Paz

Following trade liberalization, several developing countries experienced a sharp increase in the share of informal manufacturing employment. In this paper, I examine the impacts of trade liberalization on the labor markets of a small open economy, in an environment in which tariffs affect firms’ payroll tax compliance decisions. I demonstrate that a reduction in domestic import tariffs reduces the average formal wage and show that the direction of the effect on the share of informal employment depends on the initial labor market conditions. A cut in trading partner import tariffs decreases the share of domestic informal employment and increases the average formal wage. I confirm the model’s principal findings empirically, using data from the 1989–2001 Brazilian trade liberalization episode. I find the results robust to endogeneity and self-selection concerns, which are addressed, respectively, using instrumental variable and switching regression approaches.

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