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Adjusting to Trade Liberalization: Reallocation and Labor Market ...

Adjusting to Trade Liberalization: Reallocation and Labor Market ...

Plausibly, there are

Plausibly, there are informational limitations to a government’s ability in choosing the sectors inwhich employment should be subsidized. Whether public policy can be improved in that directionis an open question.Finally, the model can be applied to study other phenomena that alter relative prices acrosssectors, such as technological change.The decline of manufacturing and the rise of the servicesector is one example. Such structural change, however, is more secular in nature and agents havea longer time horizon to adjust. One can thus expect the room for policy to be smaller. A formalquantitative analysis is yet to be done.30

ReferencesJ.M. Abowd and F. Kramarz. The costs of hiring and separations. Labour Economics, 10(5):499 –530, 2003.D. Acemoglu. Training and Innovation in an Imperfect Labor Market. The Review of EconomicStudies, 64(3):445 – 464, 1997.D. Acemoglu. Good Jobs versus Bad Jobs. Journal of Labor Economics, 19(1):1–21, 2001.D. Acemoglu and R. Shimer. Efficient Unemployment Insurance. Journal of Political Economy,107(5):893–928, 1999.F. Alvarez and R. Shimer. Search and Rest Unemployment. NBER Working Paper, 2008.F. Alvarez and M. Veracierto. Labor-Market Policies in an Equilibrium Search Model. NBERMacroeconomics Annual, 14:265–304, 1999.E. Artuc, S. Chaudhuri, and J. McLaren. Trade Shocks and Labor Adjustment: A StructuralEmpirical Approach. NBER Working Paper, 2007.Y. Ben-Porath. The Production of Human Capital and the Life Cycle of Earnings. The Journal ofPolitical Economy, 75(4):352–365, 1967.J. Berg, C. Ernst, and P. Auer. Meeting the Employment Challenge: Argentina, Brazil, and Mexicoin the Global Economy. ILO, 2006.A. Bernard, S. Redding, and P. Schott. Heterogeneous Firms and Comparative Advantage. Reviewof Economic Studies, 74(1):31–66, 2007.T. Boeri and K. Terrell. Institutional Determinants of Labor reallocation in Transition. The Journalof Economic Perspectives, 16(1):51–76, 2002.M. Bosch and W.F. Maloney. Comparative Analysis of Labor Market Dynamics Using MarkovProcesses: An Application to Informality. World Bank Policy Research Working Paper Series,2007.M. Browning, L.P. Hansen, and J.J. Heckman. Micro Data and General Equilibrium Models.Handbook of Macroeconomics, 1:543–633, 1999.A.K. Cosar, N. Guner, and J. Tybout. Firm Dynamics, Job Turnover and Wage Distributions inan Open Economy. Working Paper, 2009.J. Costantini and M. Melitz. The Dynamics of Firm-level Adjustment to Trade Liberalization. InD. Marin E. Helpman and T. Verdier, editors, The Organization of Firms in a Global Economy.Harvard University Press, 2009.W.V. Cunningham. Unemployment Insurance in Brazil: Unemployment Duration, Wages, andSectoral Choice. World Bank Working Paper, 2000.C. Davidson and S.J. Matusz. International Trade and Labor Markets: Theory, Evidence, andPolicy Implications. WE Upjohn Institute, 2004.31

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