The impact of trade on the relative wages and employment of low skill workers in France

Abstract

The impact of international trade on labour markets in developed countries will be different according to the degree of competition in product markets, the flexibility of the labour market and the skill intensity of production. An econometric analysis of the impact of trade in France has been undertaken using sectoral data for the period 1985-p1992. It is found that lower relative import prices reduce the relative employment of low skill workers in the first half the period and reduce their relative wages in the second half. In both cases the effect is more pronounced in sectors where the skill intensity of production is initially low.

International Trade and Unemployment—the Worker‐selection Effect

“…Moreover, job destruction is significantly higher for larger firms. Bazen and Cardebat () find that the decline in import prices in France between 1985 and 1992 caused a reduction in low‐skilled employment. Third, to the best of our knowledge, there is no clear empirical evidence for the sign of the relationship between trade and the aggregate unemployment rate.…”

“…Take, for instance, Bazen and Cardebat (), and Biscourp and Kramarz (), who conclude that trade openness increases the unemployment rate of low‐skilled workers. By contrast, the analyses of Bernard and Jensen (), Feenstra and Hanson (), and Verhoogen () indicate that trade liberalization implies an increasing demand for high‐skilled workers.…”

Failure of Ad Valorem and Specific Tax Equivalence Under Uncertainty

“…Despite the gains of trade on the macroeconomic level, there are losers on the microeconomic level. In particular, lowskilled workers are worse o¤ because of the destruction of unskilled jobs (see Biscourp/Kramarz, 2007) and the reduction of their wages (see Bazen/Cardebat, 2001). In a recent study, OECD (2008) states that economic inequality raises social fears, which is one of the most important reasons for resistance to international integration.…”

“…The economy is endowed with an exogenous number of heterogeneous workers L, who di¤er in their abilities a j , j = 1; :::; L. Worker abilities are drawn from a Pareto distribution G a (a) = 1 (a min =a) k for a a min = 1 and individuals are assumed to know and maintain their ability levels at any point in time. 2 Besides …rms and workers, there is a government sector. On the expenditure side, the government pays (worker-speci…c) UB B j .…”

Free trade agreement and transport service trade

“…Abizadeh et al (2007) also showed that transport industries employ relatively unskilled workers compared to manufacturing and other service industries. Several studies (Helpman, Itskhoki, Muendler, & Redding, 2012;Helpman, Itskhoki, & Redding, 2010;Leamer, 1996;Slaughter, 1998;Wood, 1998) showed that trade liberalisation increases wage inequality between high and low-skilled workers, and some studies (Bazen & Cardebat, 2001;Biscourp & Kramarz, 2007;de Pinto & Michaelis, 2014;Wood, 1995) provided evidence that trade openness increased the unemployment rates of low-skilled workers. Thus, to avoid further inequity in wages and unemployment, unskilled workers in transport industries may be less likely to support trade liberalisation through FTAs (Beaulieu, Benarroch, & Gaisford, 2011).…”