Terms of trade risk with partial labor mobility

• 成果类型: Article
• 署名作者: Dennis, BN; Iscan, TB
• 署名单位: Dalhousie University; University of the Pacific
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2005.06.004
• 发表日期: 2006
• 页码: 92-114
• 关键词: Open economy macroeconomics; terms-of-trade volatility; resource reallocation; partial labor mobility; welfare costs

摘要

We examine the welfare consequences of terms-of-trade risk in a small open economy in which it is costly for workers to move between sectors. Relocation costs lead to partial labor mobility, sectoral wage gaps and income risk exceeding that of an economy in which relocation is costless. Using observed wage differentials and standard values for volatility and preferences, we find that the welfare cost of partial labor mobility alone is unlikely to be very large, even in the absence of self-insurance arrangements. In addition, modest consumption substitution elasticities significantly reduce these welfare costs. (c) 2005 Elsevier B.V. All rights reserved.