The labour market impacts of trade shocks

Rachel Griffith and Peter Levell, Institute for Fiscal Studies, Matthias Parey, University of Surrey, Agnes Norris-Keiler, London School of Economics and Political Science and Aitor Irastorza-Fadrique, University of Essex

(Project no. 1007544)

This research will form an important part of a series of projects investigating the UK's post-Brexit trade options. Prior pieces of work draw on the world input output tables (WIOT) to examine the degree to which UK industries are involved in global value chains and how this has changed over time. We will also examine the degree to which employment in different UK regions is dependent on imports or exports from or to different locations, and the extent to which they might be exposed to increased import competition from different source countries. The overall aim of this body of work is to get a better idea of the likely economic consequences of the reconfigurations to the UK's current trading relationships that Brexit will likely entail.

An additional element of the work requires access to the Longitudinal Study. In this work we wish to assess the labour market impacts of past trade shocks. The aim of this exercise would be to establish how workers might be affected by future trade liberalisation with non-EU countries such China, or for instance the loss of export markets in the European Union. It is for this purpose that we are seeking access to the Longitudinal Study data. The data includes information on respondents' employment, industry and occupation. Importantly, it will allow us to track workers over long periods of time. This means that we will be able to compare the long-run behaviour of workers who were differently exposed to particular trade shocks (measuring exposure using their lagged industry status). Combining this with industry level information from the WIOT will allow us to separately identify the effects of import competition and the effects of imports of intermediate inputs.

Our results will then allow us to inform the development of policies that the UK might introduce to alleviate the impact of future trade shocks. By examining how estimated impacts differ across workers we will be able to identify which workers are most in need of assistance, and which policies might best be used to limit any possible impacts of trade.

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