When evaluating the benefits of trade policy, policymakers need to take into account the potentially negative effects on workers’ incomes

The rise of globalization in recent decades has brought about greater trade and other linkages between nations. While this increase in trade has brought major benefits, many are also concerned about its effects on workers’ wages as foreign goods affect local production. Pravin Krishna and Mine Zeynep Senses examine the effects of trade on the volatility of changes to workers permanent incomes, finding that the risk to these incomes has increased in the past two decades. They argue that these effects are significant, and that a sizeable social safety net may be needed to insure workers against this risk.