Full Citation
Title: Country-specific Human Capital in the Labor Market: Evidence from a Tade Liberalization Episode
Citation Type: Conference Paper
Publication Year: 2014
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Abstract: In this paper I study the effect of bilateral trade on the labor market value of human capital specific to the trade partner country. I use two trade liberalization episodes NAFTA and China's accession to the WTO to test how they affected outcomes of individuals endowed with Mexico- and China-specific human capital in the US. I find that both the wage and employment gap between ethnic Mexicans and other natives narrows as a consequence of the trade shock, but within group inequality increases as it is mostly high-skilled individuals who benefit from trade. Descendants from other Latin American countries are not found to be systematically affected by NAFTA, suggesting that it is inherently Mexico-specific traits that rise in value. Main conclusions hold when analyzing China's accession to the WTO. The results suggest that the `cultural capital' that immigrants bring with them to the host country becomes productive and valuable when the costs to trade between the source and host countries decrease.
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Authors: Surovtseva, Tetyana
Conference Name: CEPR Annual Symposium on Development Economics
Publisher Location: Stockholm, Sweden
Data Collections: IPUMS USA
Topics: Labor Force and Occupational Structure
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