Does Occupational Training by the Trade Adjustment Assistance Program Really Help Reemployment. Success Measured as Matching

摘要

International trade has constantly increased throughout the second half of the 20th century, and the trend will continue well into the 21st century. International trade used to be mostly in finished goods; however, continuous technological advancement and the resulting reduction in transportation costs expanded international trade to include inputs (Yeats (1998), Hummels et al. (2001)), such as ball bearings for automobile or rubber soles for footwear. As virtually every good (and even services) becomes tradable, international trade is more active than ever. International trade has changed the competitive structure between developing and developed countries, and this affects employment in both groups of countries. First, goods from developed countries have to compete against cheaper goods from developing countries. This is a more traditional type of competition where firms compete with other firms with their final products. Since the goods from developed countries lose their market shares to goods from developing countries due to their high relative prices, employment in these countries decreases in the sectors that face high import competition (Kletzer, 2002). Secondly, workers from developed countries have to compete against low-wage workers from developing countries. International trade and fragmentation together provide great cost-reduction opportunities for firms. Firms utilize the practice of offshore outsourcing, either by establishing their own subsidiaries in low wage countries or by using arms length contracts with foreign firms, to perform tasks that were previously performed by high-wage domestic workers. The tasks that are being outsourced offshore are not only production-related, but also include services (Amiti and Wei, 2005). This has both positive and negative effects on employment in the developed countries. Employment may rise as the efficiency of outsourcing firms increases, their prices fall, and market shares rise. Firms maintain some parts of their business process at home, and increases in sales will expand employment in the domestic part of their business as well as the foreign part. If sales gain is substantial, it is possible that employment in the domestic portion of those firms actually rises above the level prior to outsourcing. However, the workers whose tasks are replaced by activities of workers in developing countries lose their job.