The effects of trade-induced worker displacement on health and mortality in Mexicoedit
This policy brief focuses on a recent paper by Fernández Guerrico (2021) that analyses the impact of trade-induced changes in local manufacturing employment opportunities on leading causes of mortality in Mexico. This is done by looking at cross-municipality variation in trade exposure given differences in industry specialization before China’s entry in the World Trade Organization in 2001. Fernández Guerrico finds that trade exposure leads to an increase in the type 2 diabetes age-adjusted mortality rate with respect to baseline and that exposure to international competition explains an important part of the increase in type 2 diabetes mortality in the period 1998-2013. The results show a decline in ischemic heart disease and chronic obstructive pulmonary disease, which can appear like perplexing results since the risk factors for these chronic diseases are similar. The author provides theoretical and empirical explanations for this heterogenous mortality response, for instance the reduction in alcohol and tobacco consumption are possible reasons for the decrease in ischemic heart disease and chronic pulmonary disease deaths. This paper offers evidence of demand-side factors, while most recent research focuses on supply-side analysis of the consequences of globalization on food prices and household’s welfare. The author finds that the negative trade shock on manufacturing labor demand impacted chronic disease mortality in Mexico via a decline of labor market opportunities, which led to income loss because of job loss and lower wage, a decline in labor conditions (i.e., informal employment), and loss of access to health insurance. When exploring heterogeneous mortality response, the results show that the decline in ischemic heart disease deaths are concentrated among men. Furthermore, the increase in obesity prevalence linked to trade exposure supports the hypothesis of a strong relationship between income and nutrition.