Adjustment costs in labour markets and the distributional effects of trade liberalization: Analytics and calculations for Vietnam

This paper explores the implications of different labour market adjustment formulations for the analysis of trade liberalization across different sectors and households in the Vietnamese economy using computable general equilibrium (CGE) models. The model is calibrated to a model admissible Vietnamese data set for 1997.We use five different adjustment cost treatments in analyzing the effects of trade liberalization in Vietnam. We compare simulation results from each and show how different treatments can significantly affect the distributional impacts of policy reforms, such as the trade liberalization. First, labour is treated as fully mobile across all sectors in the economy. Second, the sectors of economy are broken down into the two blocks of agricultural and industrial-service sectors and labour markets are treated as segmented by sector block. No mobility of labour between blocks is allowed while labour within each sector block remains fully mobile. The third is the same as the second, but movement within each agricultural and industrial-service sector block involves transactions costs. In the fourth, mobility of workers from the agricultural to industrial-service sectors and vice versa is possible with transactions costs. Finally, we calibrate the model with unemployment but no adjustment costs for labour reallocation to explore how model results differ in terms of adjustments in the labour market and welfare effects.Our results indicate significant differences in the impacts from trade liberalization across these cases. The redistributional impact of trade liberalization is sharper against poor rural households with segmented labour markets and with transactions costs, while aggregate efficiency gains are similar to no adjustment cost analyses. The conclusion is the choice of model structure for labour markets is crucially important for the perceived distributional impacts of trade liberalization.     

The role of productivity growth and farmers’ income protection policies in the decline of relative farm prices in the United States

The paper emphasizes three interrelated questions about the decline in relative farm to non-farm prices in the United States since 1973: (1) Is it unusual, (2) What caused it, and (3) Is it likely to continue? We find that based on historical and international evidence this phenomenon may be considered unusual. Separating farm price and income support in 1973 and growing relative productivity in agriculture have been the major contributors to changing the trend of the relative farm goods inflation. This trend is likely to continue based on predicted steady growth of relative agricultural productivity and continuation of direct payments and other forms of farm income support policies.     

THE MEXICAN STATE AND THE AGRIBUSINESS MODEL OF DEVELOPMENT IN THE GLOBALIZATION ERA

This article analyzes the relationship between the State and transnational capital manifested in capitalist agribusiness schemes in Mexican agriculture. It illustrates a model that has privileged one type of development in detriment to other forms of organizing rural agricultural production and labor (Real 1997). Current agricultural development in México is linked directly to the “Green Revolution”, México being prominent as its birthplace. Ironically, the Green Revolution contributed to a massive displacement of rural population to cities as human labor was replaced by machinery (1992). Development of capitalist agriculture in México and Latin America is closely related to the effects of the transnationalization of agroindustry. The importance of agribusiness has expanded in recent decades through a series of events, including the substitution of basic crops for more profitable ones and the contribution to the “new international division of labor” (Sanderson 1990). Recent trilateral transnational political and economic changes are linked to the North American Free Trade Agreement (NAFTA) between México, United States and Canada (Kearney 1995). In the case of agriculture, Palerm and Urquiola (1993) believe the relationship between United States and Mexico to be bimodal. From a perspective of Social Anthropology we provide firsthand information about two areas of agroindustry: production of vegetables for export and production of poultry where participation by different social actors was observed. Agro‐industrial entrepreneurs depend upon agricultural workers who wish to conserve a peasant way of life.     

Retirement and health benefits for Mexican migrant workers returning from the United States

In the absence of a bilateral agreement for the portability and totalization of social security contributions between the United States and Mexico, this article examines the access to pension and health insurance benefits and employment status of older Mexican return migrants. We find that return migrants who have spent less than a year in the United States have a similar level of access to social security benefits as non‐migrants. Return migrants who have spent at least a year in the United States are less likely to have public health insurance or social security benefits, and could be more vulnerable to poverty in old age. These results inform the debate on a bilateral social security agreement between the United States and Mexico to improve return migrants' social security.     

Trade, education, and innovation: Prospects for the U.S. economy

This paper examines international trade issues as vital indicators of the economic prospects of the United States and other developed economies. In particular, it challenges misuses of the doctrine of mutual gains from trade and instead argues that comparative advantage does not guarantee increases in benefits to both trading partners—especially when one partner seeks to distort the market mechanism in its favor. In the face of such mercantilist or protectionist practices, efforts to advance innovation, without retaining manufacturing jobs, will not ensure continued prosperity, as the number of jobs entailed in the invention process is small compared with the number of jobs associated with manufacturing an innovative product for mass consumption. These matters call for the urgent rethinking of trade policy by the United States and other developed nations, if they are to balance their imports and exports and ensure continued economic growth.     

Mexican Immigrant Self‐Employment Along the U.S.‐Mexico Border: An Analysis of 2000 Census Data*

Objective. This study explores the entrepreneurial tendencies of Mexican immigrants in metropolitan statistical areas (MSAs) on the U.S. side of the Mexican border vis‐à‐vis the U.S. interior. Methods. Using 2000 Census data available in the 5% Integrated Public Use Microdata Series, we empirically analyze the self‐employment rates and earnings of Mexican immigrants residing in U.S. cities near Mexico versus those in nonborder MSAs. Results. Our findings indicate that Mexican immigrants in MSAs along the U.S.‐Mexico border have significantly higher self‐employment rates (but lower earnings) than their counterparts in the rest of the United States and non‐Hispanic whites in border cities. Explanations for these findings include the existence of trade opportunities in U.S. border cities as well as intense labor market competition that crowds a greater share of immigrants into self‐employment. Conclusion. Immigration reform that curtails the immigration flow from Mexico might hinder small business formation and economic development on the U.S. side of the Mexican border.     

Cross-border school enrolment: Associated factors in the U.S.–Mexico borderlands

This paper examines students who live in Mexico but attend school in the U.S., and looks into the factors associated with their decision to study abroad. Based on Mexico’s 2015 Intercensal Survey, cross-border students are described in terms of their number, location, educational level and socioeconomic characteristics. Subsequently, the study estimates probit models to analyze the factors associated with studying in the United States. Cross-border students are mainly U.S.-born and concentrated in Tijuana and Ciudad Juárez. The probability of being a cross-border student is positively associated with age, household income and having a household member who was born in the U.S. or is a cross-border worker. Cross-border students come from high-income households with strong ties to the United States. The decision to study in the U.S. is likely taken due to the higher quality of the country’s education system and to facilitate an eventual transition into the U.S. labor market.     

Wearing corset,losing shape: The euro's effect on trade imbalances

When does trade become a one-way relationship? We study bilateral trade balances for a sample of 18 European countries over the period from 1948 through 2008. We find that, with the introduction of the euro, trade imbalances among euro area members widened considerably, even after allowing for permanent asymmetries in trade competitiveness within pairs of countries or in the overall trade competitiveness of individual countries. This is consistent with indications that pair-wise trade tends to be more balanced when nominal exchange rates are flexible. Intra-euro area imbalances also seem to have become more persistent with the introduction of the euro, some of which is linked to labor market inflexibility. Reviewing the direction of imbalances, we find that bilateral trade surpluses are decreasing in the real exchange rate, decreasing in growth differentials, and increasing in the relative volatility of national business cycles. Finally, countries with relatively higher fiscal deficits and less flexible labor and product markets exhibit systematically lower trade surpluses than others.     

A comparative study of the modes of transference of surplus labor in China's countryside

The problems posed by the recent development of a surplus labor force in rural areas of China are examined. Separate consideration is given to ways to absorb this surplus both within and outside the agricultural sector, agricultural labor migration to other rural areas, and rural-urban migration. The implications for urbanization and migration policy are reviewed.     

How much is too much: Does the size of income support transfers affect labor supply?

Cash transfer programs pursue mainly protective objectives, but can also impact rural livelihoods by inducing investments in productive activities and changing household labor allocation. We adopt a continuous treatment approach to quantify how households’ labor supply responds to transfer size. We find a shift from paid labor to own farm labor and find that the transfer size is well within a level that would have disincentive effects on time spent on own farm activities. The switch from paid to own farm labor occurs at lower levels of transfers for labor-constrained households, and at higher levels for non-labor constrained households.     

The experience of the EEC Eurolink Project in modeling bilateral trade linkage equations

Following the basic philosophical approach of the LINK Project, which links various national econometric models built in different countries, the Commission of the European Communities has succeeded in linking the full-size quarterly econometric models of the four major European countries. The Eurolink Project is being extended to cover the other EEC countries as well as the United States, Canada, and Japan. The results reported in this paper are part of this larger project which attempts to link the EEC member economies in a trade and capital flows econometric model and explain the transmission of interdependent economic fluctuations from country to country. In the present study, the interconnection between the various economies is represented by bilateral trade flows only. Flows of invisibles and of financial capital are not completely studied and are not yet ready to be included in this report.The theoretical structural model with its bilateral trade supply and demand functions and the technique employed for the construction of bilateral import and export price indices are presented. Estimation results are shown and discussed with emphasis on their use for the analysis of international trade and for policy decision making.     

Policies for food production and consumption in underdevelopment: The case of Mexico

This paper presents a system analysis approach for the investigation of the most effective agricultural and nutrition-intervening programs for improving the nutritional standards of the rural poor in a lesser developed country. The research is framed within a four-stage process. First, by means of observation, stylized patterns of nutritional status, food consumption, autoconsumption, and crop production are inferred. Second, based on previous anthropological case studies and statistical surveys, a theoretical model of the peasant household is specified. Third, the model is validated by comparing its empirical solution with the observed patterns. Fourth, the model is used to illustrate a method for evaluating alternative programs for improving the nutritional intakes of peasants. Programs appraised are credit for agricultural production, policies for affecting corn prices and input prices, and programs for subsidizing purchases of foods.The empirical study is about the peasant economy of Puebla in Mexico. The major foods of the typical diet and crop pattern of this area are corn (an energy food) and beans (a protein food). This diet is representative of other areas in Mexico and Central America.     

Deciding Where to Retire: Intended Retirement Location Choices of Formerly Undocumented Mexican Migrants*

Objective. I use transnational theory to address how transnational relationships, behavior, and context influence retirement location choices of recently legalized immigrants. I also account for the relationship between assimilation and retirement location choices. Methods. To test these theories, I use the 1992 Legalized Population Survey to examine formerly undocumented Mexican immigrants' attachment to the United States through their intended retirement location, either the United States or Mexico. I use logistic regression to test whether the two theories are related with retirement location choices. Results. I find strong support for the role of transnational factors, thus widening the scope of the literature to include variables linking immigrants to their communities within Mexico. Conclusion. This study empirically tests and quantifies transnational theory using multivariate analysis, and adds to the transnational literature by suggesting that national boundaries are political constructs that do not completely contain social and economic systems.     

Trade liberalization and labor market disruption

In the depressed economic climates which have prevailed in recent years, the most common ground for opposing trade liberalization has been fear of the short-run adjustment costs, especially in the labor market. A computable general equilibrium model (ORANI) is used to explore the amount of occupational disruption (on a 72-occupation classification) likely to be generated in the Australian labor market by four alternative trade-liberalization packages, all of which reduce the average rate of protection by 25 percent. We conclude that in all cases the disruption involved would be slight relative to historically experienced occupational change.     

Paid parental leave and other supports for parents with young children: The United States in international comparison

The United States is at a crossroads in its policies for families and women. Currently, the United States provides basic support for children, fathers, and mothers in the form of unpaid parental leave, child‐related tax breaks, and limited public child care. In contrast, the other member states of the Organisation for Economic Co‐operation and Development (OECD) empower families through paid parental leave and comprehensive investments in infants and children. The potential gains from strengthening these policies in the United States are enormous. Paid parental leave and subsidized child‐care help to get and keep more women in the workforce, contribute to economic growth, offer cognitive and health benefits to children, and give parents options in defining their preferred work‐life strategy. Indeed, the United States has been falling behind the rest of the OECD in many social and economic indicators by not adequately investing in children, fathers and mothers. Given the significant payoffs to these family supports, this article focuses on issues of reconciling work and care commitments for families with young children, and, in particular, on paid parental leave policies within the OECD and the United States.     

Female circumcision from Africa to the Americas: Slavery to the present

This paper traces the introduction of female circumcision into the Americas from Africa, from the time of the Atlantic slave trade to the present. It provides a review of the literature on the subjects of slavery, slave fertility and sexuality, slave medicine, as well as a review of current laws passed in the United States related to female circumcision. Interview material with a recent African immigrant to the United States who brings her ritual practice with her, documents an example of present-day circumcision practices in the United States. Various factors leading to the continuation or discontinuation of traditional African practices will be discussed. The desire for cultural and ethnic continuation of this practice exists among some individuals and groups amidst the controversy within the United States concerning “genital mutilation” and “genital cutting.” Medical, legal, sexological, historical, anthropological, and traditional African tribal consultation was provided for this research, adding a cross-disciplinary perspective to this topic of current interest. Graphs, maps, and anatomical illustrations provide pictorial support.     

Regime-specific impact of financial reforms on economic growth in Pakistan

This study uses and proposes a new methodological approach to construct a financial liberalization index on the basis of the dynamic factor model technique. The resulting index is used to investigate the impact of the financial sector reforms in Pakistan on economic growth. Using the Markov regime-switching model over the period 1972–2015, the empirical results showed that the examined relationship is nonlinear, nonmonotonic, state-dependent, and better described by the two-state Markov switching model characterized by the high growth regime and low growth regime. Despite the positive impact of financial liberalization on economic growth in both the high and low growth regimes, financial liberalization relatively strongly affects real GDP growth in the high growth regime. The results further demonstrate that transition probabilities establish an inordinate episode of the low growth regime. Furthermore, the high growth regime is relatively short-lived than the low growth regime. Among the other variables, trade openness and physical capital stock have a positive impact on economic growth, while labor force and government expenditure exert a negative effect on economic growth. Several economic policies are proposed and discussed for better functioning of financial sector development in Pakistan.     

Regional integration in the emerging global economy: The case of NAFTA

The rationale for international trade is that nations should specialize in production and trade to take advantage of their different resource bases. The emerging global economy differs from the international economy in that resources are becoming more mobile and intra-industry trade is becoming more important. Evidence is presented that these developments require compatibility and harmonization of technical and policy standards. It is easier to harmonize standards on a regional level than globally; thus the rise of regional integration movements. However, because the standards to protect workers, the environment and intellectual property rights are so different between Mexico on one hand, and Canada and the United States on the other, it is very difficult to develop compatibility in the case of NAFTA. Negotiations over these standards will be difficult in the NAFTA region without institutional development.     

A quantification of policy reform: an application to the Uruguay Round Negotiations on Agriculture

We employ an empirical general equilibrium model to quantify the welfare effects of trade policy reformation in the Uruguay Round Negotiations on Agriculture. Our approach is two-fold: first we focus on the primary players in the agricultural negotiations: the Cairns Group, the European Union, Japan, and the United States, where the players are defined as benevolent governments whose primary objective is to maximize total welfare, measured in terms of the equivalent variation (EV). Second, we take into account the divergent objectives of different interest groups within the targeted regions, namely from the agricultural and non-agricultural sectors, where different weights given to these sectors depending on their political influence. Here the decision making authorities, or governments, are no longer assumed to focus solely on the maximization of the region’s EV welfare; instead they are assumed to maximize a payoff that is defined by the utilities of the agricultural and non-agricultural interest groups. This is modeled with a Political Preference Function that has a CES functional form.The results lead to several conclusions. The greater the reduction in protection, the greater the increase in welfare for most of the regions of the world. We contend that comparatively moderate reductions were enacted however, because of the relative political power that the domestic agricultural interests possessed in each region.Though the goal of the WTO/GATT is obviously to liberalize trade, only modest gains may be expected in the area of agriculture due to the internal conditions that have been advanced in this paper.     

The impact of the Doha trade proposals on farmers’ incomes in China

This paper analyzes the potential impacts of the Doha trade proposals (those of the USA, EU and G20) on agricultural production and incomes of China's farmers by region and income group. By linking a global trade model to a national policy model which itself is connected to a set of disaggregated household data, we are able to assess the effects of the proposed Doha trade liberalizations on households both at the national and regional levels. According to the results of the model, the impacts of a Doha Round agreement on households differ significantly from those of China's WTO accession. China's economy would benefit from the trade liberalization associated with the Doha Round. The overall impacts, however, are relatively minor. Although farmers will benefit at the national level, the gains among farmers vary largely by income group and province. Also, the impacts on households that produce different types of crops differ.