Trade Shocks and Local Labor Markets' Linkages: Theory and Evidence

In the past few years, there has been a concern among economists and policy makers that increased openness to international trade affects some regions in a country more than others. Recent research has found that local labor markets more exposed to import competition through their initial employment composition experience worse outcomes in several dimensions such as, employment, wages, and poverty. Although there is evidence that regions within a country exhibit variation in the intensity with which they trade with each other and with other countries, trade linkages have been ignored in empirical analyses of the regional effects of trade, which focus on differences in employment composition. In this dissertation, I investigate how local labor markets' trade linkages shape the response of wages to international trade shocks. In the second chapter, I lay out a standard multi-sector general equilibrium model of trade, where domestic regions trade with each other and with the rest of the world. Using this benchmark, I decompose a region's wage change resulting from a national import cost shock into a direct effect on prices, holding other endogenous variables constant, and a series of general equilibrium effects. I argue the direct effect provides a natural measure of exposure to import competition within the model since it summarizes the effect of the shock on a region's wage as a function of initial conditions given by its trade linkages. I call my proposed measure linkage exposure while I refer to the measures used in previous studies as employment exposure. My theoretical analysis also shows that the assumptions previous studies make on trade linkages are not consistent with the standard trade model. In the third chapter, I calibrate the model to the Brazilian economy in 1991--at the beginning of a period of trade liberalization--to perform a series of experiments. In each of them, I reduce the Brazilian import cost by 1 percent in a single sector and I calculate how much of the cross-regional variation in counterfactual wage changes is explained by exposure measures. Over this set of experiments, employment exposure explains, for the median sector, 2 percent of the variation in counterfactual wage changes while linkage exposure explains 44 percent. In addition, I propose an estimation strategy that incorporates trade linkages in the analysis of the effects of trade on observed wages. In the model, changes in wages are completely determined by changes in market access, an endogenous variable that summarizes the real demand faced by a region. I show that a linkage measure of exposure is a valid instrument for changes in market access within Brazil. By using observed wage changes in Brazil between 1991-2000, my estimates imply that a region at the 25th percentile of the change in domestic market access induced by trade liberalization, experiences a 0.6 log points larger wage decline (or smaller wage increase) than a region at the 75th percentile. The estimates from a regression of wages changes on exposure imply that a region at the 25th percentile of exposure experiences a 3 log points larger wage decline (or smaller wage increase) than a region at the 75th percentile. I conclude that estimates based on exposure overstate the negative impact of trade liberalization on wages in Brazil. In the fourth chapter, I extend the standard model to allow for two types of workers according to their education levels: skilled and unskilled. I show that there is substantial variation across Brazilian regions in the skill premium. I use the exogenous variation provided by tariff changes to estimate the impact of market access on the skill premium. I find that decreased domestic market access resulting from trade liberalization resulted in a higher skill premium. I propose a mechanism to explain this result: that the manufacturing sector is relatively more intensive in unskilled labor and I show empirical evidence that supports this hypothesis.

Aging African American Women and the Impact of Positive Psychological Factors on Quality of Life

Aging African-American women are disproportionately affected by negative health outcomes and mortality. Life stress has strong associations with these health outcomes. The purpose of this research was to understand how aging African American women manage stress. Specifically, the effects of coping, optimism, resilience, and religiousness as it relates to quality of life were examined. This cross-sectional exploratory study used a self-administered questionnaire and examined quality of life in 182 African-American women who were 65 years of age or older living in senior residential centers in Baltimore using convenience sampling. The age range for these women was 65 to 94 years with a mean of 71.8 years (SD = 5.6). The majority (53.1%) of participants completed high school, with 23 percent (N = 42) obtaining college degrees and 19 percent (N = 35) holding advanced degrees. Nearly 58 percent of participants were widowed and 81 percent were retired. In addition to demographics, the questionnaire included the following reliable and valid survey instruments: The Brief Cope Scale (Carver, Scheier, & Weintraub, 1989), Optimism Questionnaire (Scheier, Carver, & Bridges, 1994), Resilience Survey (Wagnild & Young, 1987), Religiousness Assessment (Koenig, 1997), and Quality of Life Questionnaire (Cummins, 1996). Results revealed that the positive psychological factors examined were positively associated with and significant predictors of quality of life. The bivariate correlations indicated that of the six coping dimensions measured in this study, planning (r=.68) was the most positively associated with quality of life. Optimism (r=.33), resilience (=.48), and religiousness (r=.30) were also significantly correlated with quality of life. In the linear regression model, again the coping dimension of planning was the best predictor of quality of life (beta = .75, p <.001). Optimism (beta = .31, p <.001), resilience (beta = .34, p, .001) and religiousness (beta = .17, p <.01) were also significant predictors of quality of life. It appears as if positive psychology plays an important role in improving quality of life among aging African-American women.