Trade-related Job Loss and Wage Insurance: A Synthetic Review

This paper seeks to promote further integration of empirical and theoretical discussions of trade and worker adjustment. From my recent studies of the costs of job loss, I develop a set of stylized facts of trade-related job loss, with a focus on worker characteristics and labor market consequences. These stylized facts are relevant to any (credible) model of trade liberalization and adjustment costs. I then discuss the basic ideas of wage insurance and summarize the little that is known about how a program might work if implemented in the U.S. A final section provides a list of issues for a model of trade that will be consistent with the empirical stylized facts, sets out questions for future research and concludes