Trade and Employment. An Overview

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The bulk of economic research on the impacts of trade has for a long time neglected aggregate effects on jobs. While research grants an important role of trade for employment, empirical studies often struggle to attribute employment outcomes to trade policies in the long run. In contrast, both traditional and modern theories of international trade have much more to say about the reallocation of jobs following trade liberalization in the short run. Empirical research has repeatedly identified labor churning and unemployment as more or less persistent characteristics of trade liberalization periods. At the same time, increased trade flows and trade liberalization are often associated with average productivity gains and higher average incomes that arise within industries and often extend to aggregate levels.