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

This paper explores how different investment frictions affect the patterns of responses of labor markets to tariff cuts. To investigate these patterns, this paper formulates a multi-sector dynamic model featuring capital and labor adjustment costs that is fitted to Argentine data. Counterfactual simulations of a tariff decline in the textile sector are used to show that capital adjustment can create long-run responses of real wages that are larger...
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Citation

Artuc,Erhan; Brambilla,Irene; Porto,Guido.

Patterns of Labor Market Adjustment to Trade Shocks with Imperfect Capital Mobility (English). Paper is funded by the Knowledge for Change Program (KCP)|Policy Research working paper|no. WPS 9775 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/878751631627450596

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