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Potential consequences of post-Brexit trade barriers for earnings inequality in the UK

Author

Listed:
  • Rachel Griffith

    (Institute for Fiscal Studies and University of Manchester)

  • Peter Levell

    (Institute for Fiscal Studies and Institute for Fiscal Studies)

  • Agnes Norris Keiller

    (Institute for Fiscal Studies and Institute for Fiscal Studies)

Abstract
We examine the distributional consequences of post-Brexit trade barriers on wages in the UK. We quantify changes in trade costs across industries accounting for input-output links across domestic industries and global value chains. We allow for demand substitution by ?rms and consumers and worker reallocation across industries. We document the impact at the individual and household level. Blue-collar workers are the most exposed to negative consequences of higher trade costs, because they are more likely to be employed in industries that face increases in trade costs, and are less likely to have good alternative employment opportunities available in their local labour markets. Overall new trade costs have a regressive impact with lower-paid workers facing higher exposure than higher-paid workers once we account for the exposure of other household members.

Suggested Citation

  • Rachel Griffith & Peter Levell & Agnes Norris Keiller, 2020. "Potential consequences of post-Brexit trade barriers for earnings inequality in the UK," IFS Working Papers W20/27, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:20/27
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    References listed on IDEAS

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    Cited by:

    1. Garcia-Lazaro, Aida & Mistak, Jakub & Gulcin Ozkan, F., 2021. "Supply chain networks, trade and the Brexit deal: a general equilibrium analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 133(C).
    2. Alexander Davenport & Peter Levell, 2022. "Brexit and labour market inequalities: potential spatial and occupational impacts," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 38(1), pages 50-67.

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    More about this item

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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