Trade , Earnings , and Mobility −

Using a large longitudinal data set, we study the effects of increased trade on earnings and mobility in the Swedish labor market in the late 1980s and early 1990s. Earnings respond significantly to changes in industry sales, whether generated by domestic market forces or international trade: Swedish exports (imports) raise (lower) annual earnings, but changes in trade affect earnings just as any other shift in market conditions. In general, the wage effects are small; the prime response to changes in the product market appears to be variations in employment. We also examine whether trade has differential effects across skill groups. However, we do not find systematic differences in the effects of trade across the earnings distribution. Keyword: International Trade, Earnings, Mobility. JEL classification: F14, J23, J31, J62, J63. * An earlier version of this paper was part of the International Integration Consortium’s project: “Study on the Impact of the EU Enlargement on Employment and Labour Markets in the Member States”. We gratefully acknowledge comments from members of the consortium and seminar participants at the Trade Union Institute for Economic Research (FIEF), the Norwegian School of Economics in Bergen and Uppsala University. We also thank Pär Hansson for providing data and Lisa Fredriksson for research assistance. This research was partly funded by the Council for Work Life Research (RALF).