Erhan Artuc – författare

Very few studies focus on the growth of labor market opportunities that follow from exports. Entangled is one of the first to systematically examine the localized effects of long-run export growth in South Asia. The basic premise is that adjustment costs matter. If adjustment costs matter, then we would expect to see significant and persistent differences in wages across industries and regions. We would expect tosee that exporting industries and regions tend to pay higher wages and that these differences would only slowly dissipate over time (if at all). We would expect to see that increases in exports would increase the demand for workers. An increase in demand for workers could increase either wages, employment, or both, depending on the ability and willingness of workers to switch industries and regions. If workers face high adjustment costs, the increase in labor demand from exports would be associated with higher wage growth, but not necessarily higher employment growth, because workers would not move into expanding industries. As a result, firms would have to raise wages to attract the workers they need. Since expanding takes more time than contracting, we would expect to see the strongest positive wage effects over the longest time horizon, because exports take longer to affect labour markets than import competition. The report evaluates these predictions using data from Bangladesh, India, and Sri Lanka. The results are consistent with the presence of very significant worker-level adjustment costs in South Asia and suggest that the gains from exports to date have still been modest.

This volume examines the relationship between trade liberalization policies and income inequality in developing countries. Using survey data for 54 developing countries, the book explores the potential trade-off between the gains from trade and the distribution of those gains and provides a quantification of the inequality-adjusted welfare gains from trade. The book begins with an introduction to the model and its methodology. Chapter 2 sets up the model and derives the formulas for the welfare effects of trade policy. Chapter 3 uses the tariff data and the survey data to estimate those welfare effects in 54 countries. Chapter 4 discusses the gains from trade and their distribution. Chapter 5 evaluates and quantifies the trade-off between income gains and inequality costs of trade. Chapter 6 presents robustness tests and results from alternative models of the impacts of trade. The last chapter reviews the Household Impacts of Trade database and dashboard, which provides datafor replication and a platform that allows researchers to simulate agricultural tariff policy shocks. Providing a comprehensive empirical analysis of the effects of trade policy on inequality in developing countries, this volume will be of interest to researchers and students of economic inequality, development, and international trade as well as policymakers interested in the inequality and poverty consequences of trade policy.