Estimating wage effects consistent with TPP import projections
|Change in total trade with LDCs, 1973–2013||Estimated TPP effect, based on import/GDP ratio||Estimated TPP effect, alternate import/income gain ratio||Estimated TPP effect, based on import/GDP ratio||Estimate TPP effect, alternate import/income gain ratio|
|Based on model in Bivens (2013)||Based on Autor et al. (2013)|
|Overall income gains||0.3%||0.0%||0.4%||0.0%||0.4%|
|Implied wage effects|
Note: The first three columns are based on the methodology described in Bivens (2013). The model used to generate relative wage changes generates these changes, overall income gains, and import share simultaneously. This means that the Petri and Plummer (2012) results on overall income growth and import share increases are inconsistent with this model’s structure. To address this, we model the relationships between relative wages, overall income gains, and import shares two ways. In the first, we assume that the estimated TPP import share increase is correct and in the second, we assume that the estimated TPP overall income gains are correct. The second column uses the import share as the forcing variable, while the third column uses the increase in overall income as the forcing variable. The third column uses the ratio between import gains and income gains estimated by Anderson, Martin, and van der Mensbrugghe (2006) in their estimate of gains from full merchandise trade liberalization, and then applies that ratio to the Petri and Plummer (2012) estimate of national income gains to get an implied import effect. The final two columns use the same measure of trade increase due to the TPP, but then apply the estimated effect of import flows on wages from Autor, Dorn and Hanson (2013).
Source: EPI analysis of Bivens (2013); Petri and Plummer (2012); Anderson, Martin, and van der Mensbrugghe (2006); and Autor, Dorn, and Hanson (2013)