Trade and Income

Paper Session

Friday, Jan. 6, 2017 2:30 PM – 4:30 PM

Sheraton Grand Chicago, Grant Park
Hosted By: Society of Government Economists
  • Chair: Bonni van Blarcom, Library of Congress

NAFTA and the Gender Wage Gap

Shushanik Hakobyan
,
Fordham University
John McLaren
,
University of Virginia

Abstract

Using US Census data for 1990-2000, we estimate effects of NAFTA on US wages, focusing on differences by gender. We find that NAFTA tariff reductions are associated with substantially reduced wage growth for married blue-collar women, much larger than the effect for other demographic groups. We investigate several possible explanations for this finding. It is not explained by differential sensitivity of female-dominated occupations to trade shocks, or by household bargaining that makes married women workers less able to change their industry of employment than other workers. We find some support for an explanation based on an equilibrium theory of selective nonparticipation in the labor market, whereby some of the higher-wage married women workers in their industry drop out of the labor market in response to their industry’s loss of tariff. However, this does not fully explain the findings so are left with a puzzle.

Improving Adherence to Labor Regulations along the Global Value Chain: Incentivizing Exporting Firms

Caitlyn Carrico
,
Purdue University

Abstract

Modern value chains are increasingly globalized, and policymakers often face challenges in implementing cross-border regulations. Trends in macro-data from ILO and UN Comtrade on regulatory efficacy and trade offer limited insight, demonstrating the need for firm-level analysis. In this paper, I present a theoretical model of firm behavior, establishing economic linkages between firm productivity, regulatory adherence, and firm survival. Empirical literature using firm-level data from the Better Work Initiative demonstrates positive associations of adherence with productivity and survival, supporting results for the predictions from my model. I discuss the Better Work data and implementation to test model structure and to calibrate the model for policy experimentation.

Incomes of the Population 65+: A New Look with Linked Survey-Administrative Data

C. Adam Bee
,
U.S. Census Bureau
Joshua Mitchell
,
U.S. Census Bureau

Abstract

Over the past several decades, poverty among the population age 65 and over has declined precipitously while income has also steadily increased relative to the median (DeNavas-Walt et al. 2013; Meyer and Sullivan 2010). By necessity, previous studies of poverty and income are based on household surveys. Critics allege, however, that these survey data are subject to underreporting of various sources of income and that the problem may be particularly acute for the population age 65 and over who may rely on capital income including withdrawals from defined-contribution accounts. This project provides a comprehensive evaluation of income data quality of the Current Population Survey March Supplement (CPS ASEC), with a focus on the population age 65 and over. While existing validation studies have typically focused on a single source of income, our project uses a wide array of administrative datasets linked to the CPS-ASEC to validate many components of total household income and provide a new look at income and poverty from both a static and multi-year perspective. Among other results, we find that substituting administrative values reduces the official poverty measure for those aged 65 and over by about two percentage points, from 9 percent to 7.

Early Childhood Development, Earnings Inequality and Social Mobility in an Education Signaling Model

Lakshmi Raut
,
Indian Institute of Management

Abstract

The growing income inequality has been a big concern for economists and policy makers around the world. Many factors are responsible for the observed burgeoning income inequality, such as capital outflow, relocation of jobs, declining labor union, i.e., declining bargaining power of the labor, poor regulation of financial institutions, corruption, and all-encompassing globalization. Incomes of the bottom 99 percent population in a society comes mainly from earnings, and much of the earnings inequality results from the inequality of skill formation. The children of poor socioeconomic status stays behind skill accusations as compared to their rich counterpart. In modern technology-rich economies, providing high quality education to the talented individuals and matching their jobs with the highly productive technical sector is crucial for economic growth, earnings inequality and social mobility. Because education is used as a signal for a worker's unobserved endowment of talents, its acuisition by various social groups distorts productive efficiency, lowers social mobility and increases earnings inequality. This paper provides a signaling equilibrium framework to study these issues.
Discussant(s)
Maximiliano Dvorkin
,
Federal Reserve Bank of St. Louis
Drusilla Brown
,
Tufts University
John Sabelhaus
,
Federal Reserve Board
Basit Zafar
,
Federal Reserve Bank of New York
JEL Classifications
  • F1 - Trade
  • J0 - General