Import Competition and Post-displacement Wages in Korea: Whom You Trade with Matters

Abstract

Using longitudinal survey data from Korean workers, we examine whether the effects of import competition on post-displacement wages are heterogeneous between skilled and unskilled workers for trading partners with different endowments of (un)skilled labor. Reemployment wages of displaced workers show a decrease for skilled workers but an increase for unskilled ones when imports from an advanced country rise, whereas they decrease for unskilled workers but increase for skilled ones when imports from a developing country rise. The results provide support for the Stolper-Samuelson theorem.