Moynihan Institute and Trade Development and Political Economy present:

Erhan Artuc, The World Bank

Patterns of Labor Market Adjustment to Trade Shocks with Imperfect Capital Mobility

The authors explore how different types of factor market frictions shape the short- and long-run labor-market adjustment to tariff cuts. To investigate these patterns empirically, the authors formulate a multi-sector dynamic model featuring capital and labor adjustment costs that they fit to Argentine data. Long-run responses of real wages are indeed larger than the short-run responses. In Food and Beverages, the real wage declines by 1.56 and 6.21 percent in the short- and long-run. In Textiles, the long-run response is about twice as large.

Dr. Erhan Artuc is a senior economist in the Development Research Group, Trade and International Integration Team.  Dr. Artuc’s research focuses on international trade policy, migration and labor markets. Dr. Artuc holds a PhD in Economics from the University of Virginia.

Sponsored by the Trade Development and Political Economy at the Moynihan Institute of Global Affairs.