How long should we expect the labor market transition following a trade liberalization episode to last? To what extent will the potential gains from trade be reduced due to the slow adjustment of the economy to the new trade equilibrium? What are the characteristics of the workers who will lose the most from trade liberalization?
The increasing globalization of the world economy is a prominent area of public debate. Issues of interest include the following:
The determinants of international trade and multinational activity
The implications of international trade and multinational activity for welfare and the distribution of income
The effects of trade liberalization on firm and aggregate productivity
The organization of firm production activities around the world
National trade policies and the World Trade Organization (WTO)
In our globalized economy, information about the costs, benefits, and distributional consequences of lowering trade barriers is essential to policymakers trying to decide if a particular agreement should be supported. This research fills an important gap in our knowledge concerning the effects of reducing trade barriers when firms have some degree of monopoly power.
Many fear that climate change will have severe effects on the global economy, particularly through the threat to food production and farmers’ earnings. This research suggests that much of the potential harm could be avoided if farmers can switch their crops in response to changing relative yields.