Over at vox, Pravin Krishna and Mine Z. Senses explain how trade can negatively affect income:
In recent research (Krishna and Senses 2009), we have studied a different dimension of the labour market experience and focused on the effect of increased trade on the risk to income (the variance of unpredictable changes to income) experienced by workers in the US.
...
Our results suggest that increased import penetration has a statistically and economically significant effect on labour income risk in the US manufacturing sector.
Alas, while it would be nice if trade was good for everyone, there are losers. It's useful, I think, to acknowledge this and come up with appropriate responses, as the authors do:
Our finding of economically significant negative effects through the income risk channel does not suggest that the gains from trade are negative overall. Therefore, this research should not be viewed as a call for protection, or support for anti-globalisation arguments. Instead, our results indicate that the income risk channel should be considered seriously when evaluating the costs and benefits of trade and trade policy reform. One implication from our findings is to emphasise to policymakers the need for a social safety net to insure workers against the risks of increased exposure to trade.
