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NBER Working Papers and Publications
|October 2007||Trade Shocks and Labor Adjustment: Theory|
with Stephen Cameron, John McLaren: w13463
We construct a dynamic, stochastic rational expectations model of labor reallocation within a trade model that is designed so that its key parameters can be estimated for trade policy analysis. A key feature is the presence of time-varying idiosyncratic moving costs faced by workers. As a consequence of these shocks: (i) Gross flows exceed net flows (an important feature of empirical labor movements); (ii) the economy features gradual and anticipatory adjustment to aggregate shocks; (iii) wage differentials across locations or industries can persist in the steady state; and (iv) the normative implications of policy can be very different from a model without idiosyncratic shocks, even when the aggregate behaviour of both models is similar. It is shown that the equilibrium solves a particul...
Published: "Trade Shocks and Labor Adjustment: A Structural Empirical Approach.” Joint with Erhan Artuç and Shubham Chaudhuri. American Economic Review, June 2010.
|Some Simple Analytics of Trade and Labor Mobility|
with John McLaren: w13464
We study a simple, tractable model of labor adjustment in a trade model that allows us to analyze the economy's dynamic response to trade liberalization. Since it is a neoclassical market-clearing model, we can use duality techniques to study the equilibrium, and despite its simplicity a rich variety of properties emerge. The model generates gross flows of labor across industries, even in the steady state; persistent wage differentials across industries; gradual adjustment to a liberalization; and anticipatory adjustment to a pre-announced liberalization. Pre-announcement makes liberalization less attractive to export-sector workers and more attractive to import-sector workers, eventually making workers unanimous either in favor of or in opposition to liberalization. Based on these resul...
|Trade Shocks and Labor Adjustment: A Structural Empirical Approach|
with Erhan Artuc, John McLaren: w13465
The welfare effects of trade shocks depend crucially on the nature and magnitude of the costs workers face in moving between sectors. The existing trade literature does not directly address this, assuming perfect mobility or complete immobility, or adopting reduced-form approaches to estimation. We present a model of dynamic labor adjustment that does, and which is, moreover, consistent with a key empirical fact: that intersectoral gross flows greatly exceed net flows. Using an Euler-type equilibrium condition, we estimate the mean and the variance of workers' switching costs from the U.S. March Current Population Surveys. We estimate high values of both parameters, implying both slow adjustment of the economy, and sharp movements in wages, in response to a trade shock. Simulations of a t...
Published: Erhan Artuc & Shubham Chaudhuri & John McLaren, 2010.
"Trade Shocks and Labor Adjustment: A Structural Empirical Approach,"
American Economic Review,
American Economic Association, vol. 100(3), pages 1008-45, June.
citation courtesy of
|December 2003||Estimating the Effects of Global Patent Protection in Pharmaceuticals: A Case Study of Quinolones in India|
with Pinelopi K. Goldberg, Panle Jia: w10159
Under the TRIPS agreement, WTO members are required to enforce product patents for pharmaceuticals. The debate about the merits of this requirement has been extremely contentious. Many low income economies claim that patent protection for pharmaceuticals will result in substantially higher prices for medicines, with adverse consequences for the health and well-being of their citizens. On the other hand, research-based global pharmaceutical companies, argue that prices are unlikely to rise significantly because most patented products have therapeutic substitutes. In this paper we empirically investigate the basis of these claims. Central to the ongoing debate is the structure of demand for pharmaceuticals in poor economies where, because health insurance coverage is so rare, almost all medi...
Published: Chaudhuri, Shubham, Pinelopi Goldberg, and Panle Jia. Estimating the Effects of Global Patent Protection in Pharmaceuticals: A Case Study of Quinolones in India." American Economic Review (Dec. 2006): 1477-1513. citation courtesy of