Why international trade?
Economy of scale, benefits of
cumulation and other virtuous
Differences in factors of production (incl.
skills), technology, institutions and policy
Price differences of commodities between
Countries specialise in production where they
have a relative advantage.
International trade in commodities in which
People are also mobile
Source: The World Bank
The world is smaller than ever
…and yet it seems to be bigger than ever
International trade is not
only a good thing
China shock - the exposure to China of the
labour market regions of the United States
• Regions that were exposed to
imports from China
experienced the biggest drops
➢Regional migration propensity
does not grow
➢Adaptation is slow
➢Increase in well-being close to
zero (Caliendo, 2015)Source: Autor et al. (2016)
• Immigrants are placed in
lower skill level and lower
earnings level jobs
(compared to the country
they come from)
• At lower income levels
wage ↓, at higher income
➢On average, a slight
Source: Dustmann et al (2013)
• Foreign competition shakes or at least threatens some of the
traditional (domestic) actors:
'they steal our market"
• Immigration causes resentment:
'they steal our work"
Commodity market disruption (Autor
et al, 2016)
Using a quantitative theoretical model, Caliendo et al. (2015) find that in the
immediate aftermath of a trade shock, constructed to mimic the effects of growth
in US imports from China, US net welfare gains are close to zero.
China’s economic growth has lifted hundreds of millions of individuals out of
The ultimate and sizable net gains are realized only once workers are able to
reallocate across regions to move from declining to expanding industries.
Immigration (Constant, 2014)
Whether high- or low-skilled, migrants rarely substitute directly for native workers. Instead,
migrants often complement native workers or accept jobs that natives don’t want or can’t do.
They create new jobs by increasing production, engaging in self-employment, and easing
upward job mobility for native workers.
The presence of immigrants increases demand and can spur new businesses to open, creating
more jobs for immigrant and native populations.
Immigration’s positive effects far outweigh any negative impact. Migrants choose locations with
available jobs and fill labor shortages.
Image Gerd Altmann from Pixabay