Trade dynamics with sector-specific human capital
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Trade dynamics with sector-specific human capital. / Guren, Adam; Hémous, David; Olsen, Morten.
I: Journal of International Economics, Bind 97, Nr. 1, 01.01.2015, s. 126-147.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - Trade dynamics with sector-specific human capital
AU - Guren, Adam
AU - Hémous, David
AU - Olsen, Morten
PY - 2015/1/1
Y1 - 2015/1/1
N2 - This paper develops a dynamic Heckscher Ohlin Samuelson model with sector-specific human capital and overlapping generations to characterize the dynamics and welfare implications of gradual labor market adjustment to trade. Our model is tractable enough to yield sharp analytic results, that complement and clarify an emerging empirical literature on labor market adjustment to trade. Existing generations that have accumulated specific human capital in one sector can switch sectors when the economy is hit by a trade shock. Nonetheless, the shock induces few workers to switch, generating a protracted adjustment that operates largely through the entry of new generations. This results in wages being tied to the sector of employment in the short-run but to the skill type in the long-run. Relative to a world with general human capital, welfare is improved for the skill group whose type-intensive sector shrinks. We extend the model to include physical capital and show that the transition is longer when capital is mobile. We also introduce nonpecuniary sector preferences and show that larger gross flows are associated with a longer transition.
AB - This paper develops a dynamic Heckscher Ohlin Samuelson model with sector-specific human capital and overlapping generations to characterize the dynamics and welfare implications of gradual labor market adjustment to trade. Our model is tractable enough to yield sharp analytic results, that complement and clarify an emerging empirical literature on labor market adjustment to trade. Existing generations that have accumulated specific human capital in one sector can switch sectors when the economy is hit by a trade shock. Nonetheless, the shock induces few workers to switch, generating a protracted adjustment that operates largely through the entry of new generations. This results in wages being tied to the sector of employment in the short-run but to the skill type in the long-run. Relative to a world with general human capital, welfare is improved for the skill group whose type-intensive sector shrinks. We extend the model to include physical capital and show that the transition is longer when capital is mobile. We also introduce nonpecuniary sector preferences and show that larger gross flows are associated with a longer transition.
KW - Sector-specific human capital
KW - Trade shock
KW - Transitional dynamics
KW - Worker mobility
KW - E24
KW - F11
KW - F16
KW - J24
U2 - 10.1016/j.jinteco.2015.04.003
DO - 10.1016/j.jinteco.2015.04.003
M3 - Journal article
AN - SCOPUS:84941259238
VL - 97
SP - 126
EP - 147
JO - Journal of International Economics
JF - Journal of International Economics
SN - 0022-1996
IS - 1
ER -
ID: 190213485