The Impacts of Integration and Trade on Labor Markets:
Download
1 / 14

The Impacts of Integration and Trade on Labor Markets ... - PowerPoint PPT Presentation


  • 130 Views
  • Uploaded on

The Impacts of Integration and Trade on Labor Markets: Methodological Challenges and Consensus Findings in the NAFTA Context . Michael Abbott Labor Economist Commission for Labor Cooperation Washington, DC May 11, 2004. Presentation Agenda:. Methodologies used in this literature

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'The Impacts of Integration and Trade on Labor Markets ...' - Jims


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Slide1 l.jpg

The Impacts of Integration and Trade on Labor Markets: Methodological Challenges and Consensus Findings in the NAFTA Context

Michael Abbott

Labor Economist

Commission for Labor Cooperation

Washington, DC

May 11, 2004


Presentation agenda l.jpg
Presentation Agenda:

  • Methodologies used in this literature

  • Non-methodological limitations and complexities

  • Pre- and post-NAFTA research findings (trade, employment, wages and income inequality effects)

  • Lessons for developing countries in the study of trade liberalizing effects


Methodologies l.jpg

Pre-NAFTA Studies

(Forecasting)

Linked Macro-economic Models (LMMs)

Computable General Equilibrium Models (CGE models)

Post-NAFTA Studies

(Evaluation Methods)

Partial Equilibrium Models

Qualitative/ Quantitative Methods

Methodologies


Linked macro economic models lmms l.jpg
Linked Macro-economic Models (LMMs)

  • Forecasting of aggregate economic activity

  • Rely upon historical data relationships from estimated equations and parameter estimates

  • Effect: difference between the baseline and revised (with policy change) forecast

  • Two models are linked together

  • Allows for simultaneous effect forecasts


Computable general equilibrium cge models l.jpg
Computable General Equilibrium (CGE) Models

  • Allow for isolation of direct and indirect effects of a policy

  • Simulate relationships (interactions) between all sectors of the economy; specific sectors and industries can be analyzed

  • Allow for assumptions regarding economic behavior

  • Sensitivity analysis to gauge robustness of results on parameter estimates

  • A lot of variation and specificity between individual CGE models


Partial equilibrium analysis l.jpg
Partial Equilibrium Analysis

  • Estimate effects of a policy on one or more variables by holding others constant

  • High degree of flexibility of analysis

  • Regression analysis is very prevalent

  • Tend to focus on one or a small number of variables; interactions not usually tested

  • Allow for tests “of” a policy, rather than “since” a policy


Qualitative quantitative methods l.jpg
Qualitative/Quantitative Methods

  • Not confined to purely statistical relationships between variables

  • Quantitative reasoning of secondary research is common

  • Allows for a large breadth of analysis

  • Can capture numerous effects of a policy

  • Causal relations are not definitively proven; effective for “since” NAFTA effects


Non methodological limitations and challenges l.jpg
Non-methodological Limitations and Challenges

  • Evaluation difficult due to recency of policy (i.e. NAFTA)

  • Data comparability problems

  • Constructing a controlled experiment in a social science setting – extraneous variables and surprise “shocks”

  • Ascribing trade liberalizing success or failure to individual, or a small number of, indicators

  • Research tends to focus on one country rather than “all” NAFTA-countries


Nafta effects on trade l.jpg
NAFTA Effects on Trade

  • Pre-NAFTA consensus: net trade creating, with Mexico showing the most significant gains. Trade diversion a strong possibility

  • Post-NAFTA results:

    • Increased exports from Mexico to the U.S.

    • Small increase in exports from Canada to the U.S.

    • Minimal effect on U.S. trade (exports and overall)

  • Trade diversion evidence is mixed – occurs in some sectors, but not in others


Nafta effects on employment l.jpg
NAFTA Effects on Employment

  • Pre-NAFTA consensus: no consensus for the U.S. and Canada; generally assumed that employment would increase at least moderately in Mexico

  • Post-NAFTA results: no consensus

  • Results tended to depend upon the various inputs added and the assumptions factored into the models

  • Disentangling “of” from “since” –NAFTA employment effects is difficult


Nafta effects on wages and income inequality l.jpg
NAFTA Effects on Wages and Income Inequality

  • Pre-NAFTA consensus: no real consensus – small effects on wages for the U.S.

  • Post-NAFTA results: most studies are qualitative/quantitative

    • No real evidence of wage increases specifically due to NAFTA – product prices used to infer effect of trade on wages

    • Income inequality has increased, but has not been directly attributed to NAFTA in econometric studies

  • Lack of three-country analysis on these topics


Lessons for developing countries studying trade liberalization effects l.jpg
Lessons for Developing Countries Studying Trade Liberalization Effects

  • Larger and more trade “open” countries tend to be less affected by a single agreement

  • There is no consensus in the economics community on a “best fit” methodology

  • Determining the proper methodology depends upon the study’s goal (i.e. forecasting or evaluation) and the availability and comparability of data


General factors that affect results l.jpg
General Factors that Affect Results Liberalization Effects

  • Data comparability

  • Assumptions that are built into the original model

  • Generalized causal statements regarding effects “of” NAFTA versus effects “since” NAFTA can be specious

  • The appropriate elapsed time from a policy change to determining its effects is debatable


Checklist prior to conducting research l.jpg
Checklist Prior to Conducting Research Liberalization Effects

  • Ensure that data is comparable and accurate – a reliable statistics agency is essential

  • The presence of extraneous variables must be accepted

  • External “shocks” will affect forecasts and results

  • Know what it is you are asking for!


ad