Chapter

The Labour Market Effects of International Trade: A Computable General Equilibrium Model

Alasdair Smith

in Trade and Jobs in Europe

Published in print August 1999 | ISBN: 9780198293606
Published online August 2004 | e-ISBN: 9780191601262 | DOI: http://dx.doi.org/10.1093/0198293607.003.0006
 The Labour Market Effects of International Trade: A Computable General Equilibrium Model

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A computable general equilibrium (CGE) model is developed to examine the impact of international trade on the labour market. The model confirms the general conclusion that the effects of trade on labour demand or relative wages are small. It is argued that the ‘mainstream’ empirical trade model, of which the CGE model is one version, is unsuitable for providing accurate estimates of the labour market effects of trade, because its structure does not provide an appropriate model of either the skill endowments of the economy or the skill intensity of production.

Keywords: computable general equilibrium model; international trade; labour market; wages; labour demand

Chapter.  8304 words. 

Subjects: Macroeconomics and Monetary Economics

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