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The Distributional Effects of International Trade: Facts and Misconceptions

February 25, 2020

Policy Research Talk | Washington, D.C. and Online

  • Has international trade contributed to a growing rift between winners and losers in the global economy? Over the last decade, researchers have developed new empirical and analytical approaches to answer this question. In this talk World Bank economist Erhan Artuc will lay out the facts, answers, and misconceptions surrounding this growing literature.

    Three empirical challenges in particular have led to overstating the net costs of trade liberalization. First, when workers can quickly and easily adjust to policy reforms, the gains from liberalization are greater. However, the empirical identification of the impact of liberalization requires large mobility frictions across local markets. As a result, research only identifies the effects of liberalization when adjustment costs are high, leading to biased results. Second, the welfare gains are diffuse and concealed while the costs – mostly arising from job losses – are concentrated and easily identifiable. Finally, the most significant impacts of trade liberalization are dynamic in nature, arising from technological progress, pro-competitive innovation, and new job opportunities. Standard empirical approaches only capture static effects, therefore underestimating the gains from liberalization.

    Artuc will present innovative and policy-relevant approaches to overcoming these challenges.

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    Erhan Artuc (Speaker)

    Senior Economist

    Erhan Artuc is a Senior Economist in the World Bank's Development Research Group (Trade and International Integration Team). Artuc’s research primarily focuses on international trade policy and its effects on labor markets and jobs. His papers explore distributional effects of trade liberalization, timing of trade policy, regional and sectoral mobility of workers, unemployment, informality, refugees and international migration. He has published in the Journal of International Economics, American Economic Review, Economic Journal, Journal of Development Economics and other leading academic outlets.

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    William Maloney (Discussant)

    Chief Economist, Equitable Growth, Finance and Institutions

    William F. Maloney is Chief Economist for Equitable Growth, Finance and Institutions in the World Bank Group. Previously he was Chief Economist for Trade and Competitiveness and Global Lead on Innovation and Productivity. Prior to the Bank, he was a Professor of Economics at the University of Illinois, Urbana-Champaign (1990-1997) and then joined, working as Lead Economist in the Office of the Chief Economist for Latin America until 2009. From 2009 to 2014, he was Lead Economist in the Development Economics Research Group. From 2011 to 2014 he was Visiting Professor at the University of the Andes and worked closely with the Colombian government on innovation and firm upgrading issues.

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    Aart Kraay (Chair)

    Director of Research

    Aart Kraay is Director of the Development Research Group at the World Bank. He joined the World Bank in 1995 after earning a Ph.D. in economics from Harvard University (1995), and a B.Sc. in economics from the University of Toronto (1990). His research interests include international capital movements, growth and inequality, governance, and the Chinese economy. His research on these topics has been published in scholarly journals such as the Quarterly Journal of Economics, the Review of Economics and Statistics, the Economic Journal, the Journal of Monetary Economics, the Journal of International Economics, and the Journal of the European Economic Association. He is an associate editor of the Journal of Development Economics, and co-editor of the World Bank Economic Review. He has also held visiting positions at the International Monetary Fund and the Sloan School of Management at MIT, and has taught at the School of Advanced International Studies at Johns Hopkins University.

  • The monthly Policy Research Talks showcase the latest findings of the World Bank’s research department, challenge and contribute to the institution’s intellectual climate, and re-examine conventional wisdom in current development theories and practice. These talks facilitate a dialogue between researchers and operational staff and inform World Bank operations both globally and within partner countries. Read More »

EVENT DETAILS

Watch Live on February 25