Sunday 20 November 2011

Human Capital and Adjustment to Trade

The role of training in labour market adjustment

"The role that human capital formation may play in the economy’s
response to a trade shock is a relatively unexplored topic in the trade
literature. Changes in trade policy, through its effects on relative factor
returns, also change the incentives for workers to acquire skills. This
observation applies not only to new entrants to the labour force, but
also to those currently employed. Two different approaches have been
considered for the role of human capital, and therefore formal education
and training in trade adjustment, depending on whether the skills
acquired apply economy-wide or are industry-specific".