How international trade affects wages and employment.

Abstract

This dissertation explores the effects of international trade on labor market outcomes in both developed and developing countries. Using plant-level data from the Chilean manufacturing sector and exogenous variation in exports supplied by an exhort subsidy policy in Chile, in the first chapter, I investigate how changes in exports affect both the skilled and unskilled wages. As predicted by a model with differential duality upgrading by exporters, the estimates show that skilled wages rose by about 6 to 8.5 percent while the estimated imply that the unskilled wage rose only about 1 to 1.5 percent a result of the export subsidy. The second chapter reverses the perspective and examines how import competition, especially from developing countries, alters post-displacement outcomes for displaced U.S. workers. As predicted by the theory, the results imply that increased levels of imports from developing countries in the industry of displacement decrease unemployed worker's re-employment wages by about 4 percent. The analysis further shows that an increase in the average statewide manufacturing import penetration from developing countries raises jobless spell duration by about 1 week. The third chapter estimates differences in labor demand elasticities between exporting and non-exporting establishments using plant-level data from Chile. Utilizing exogenous variation in exports brought about by an export subsidy, I show that exports tend to increase the magnitude of the own-wage elasticity of demand for one of the two labor factors of production--skilled and unskilled labor. The estimates imply that the own-wage elasticity of demand for the second labor factor falls. The results are consistent with a model where exports are of higher quality than production for domestic consumption and production of quality is more sensitive to either skilled or unskilled labor.