Unclear If Trans-Pacific Partnership Trade Agreement Would Positively Or Negatively Affect Job Markets

 In Economy, Government Regulations, International Relations   Last Updated: June 21, 2017

Research is unclear at to whether the Trans-Pacific Partnership Trade Agreement, which was recently blocked by President Trump, will positively or negatively affect job growth, wages, income, and exports.

The Peterson Institute for International Economics (PIIE) published a study in January of 2016 that noted:

The TPP will increase annual real incomes in the United States by $131 billion, or 0.5 percent of GDP, and annual exports by $357 billion, or 9.1 percent of exports, over baseline projections by 2030, when the agreement is nearly fully implemented. Annual income gains by 2030 will be $492 billion for the world. …the agreement will raise US wages but is not projected to change US employment levels; it will slightly increase “job churn” (movements of jobs between firms) and impose adjustment costs on some workers.

However, researchers at the Global Development And Environment Institute stated in a separate report published in January of 2016:

The benefits to economic growth are even smaller than those projected with full-employment models, and are negative for Japan and the United States. More important, we find that the TPP will likely lead to losses in employment and increases in inequality

According to the Global Development And Environment Institute report, if there are more people who are unemployed in one or more of the countries involved in TPP and labor is cheaper in those countries, jobs will naturally shift towards those countries.  The United States has a very low unemployment rate and labor is more expensive (wages are higher), so the lower cost jobs will slowly migrate to other countries within the TPP agreement.

However the United States has a growing population of higher skilled workers that would not fill these jobs and the U.S. economy will naturally shift towards these types of jobs.

 

 

 

Petri, Peter, and Michael Plummer. “The Economic Effects of the Trans-Pacific Partnership: New Estimates.” Working Paper 16.2 (2016): 1-33. Jan. 2016. Web. 2 Feb. 2017.
Capaldo, Jeronim, and Alex Izurieta. “Trading Down: Unemployment, Inequality and Other Risks of the Trans-Pacific Partnership Agreement.” Working Paper 16.01 (2016): 1-24. Global Development And Environment Institute, Jan. 2016. Web. 2 Feb. 2017.

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