TY  - JOUR
AU  - Davis,Donald R.
AU  - Harrigan,James
TI  - Good Jobs, Bad Jobs, and Trade Liberalization
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13139
PY  - 2007
Y2  - May 2007
UR  - http://www.nber.org/papers/w13139
L1  - http://www.nber.org/papers/w13139.pdf
N1  - Author contact info:
Donald R. Davis
Columbia University, Department of Economics
1038 Intl. Affairs Building
420 West 118th St.
New York, NY 10027
Tel: 212/854-4037
Fax: 212/854-8059
E-Mail: drd28@columbia.edu

James Harrigan
Department of Economics
University of Virginia
P.O. Box 400182
Charlottesville, VA 22904-4182
Tel: 434-243-8354
Fax: 434-982-2904
E-Mail: harrigan@nber.org
AB  - How do labor markets adjust to trade liberalization? Leading models of intraindustry trade (Krugman (1981), Melitz (2003)) assume homogeneous workers and full employment, and thus predict that all workers win from trade liberalization, a conclusion that is at odds with the public debate. Our paper develops a new model that merges Melitz (2003) with Shapiro and Stiglitz (1984), so also links product market churning to labor market churning. Workers care about their jobs because the model features aggregate unemployment and jobs that pay different wages to identical workers. Simulations show that for reasonable parameter values as many as one-fourth of "good jobs" (those with above average wage) may be destroyed in a liberalization. This is true even as the model shows minimal impact on aggregate unemployment and quite substantial aggregate gains from trade.
ER  -