Trade deals cut wages by making labor less valuable, not by concentrating employers

Trade liberalization makes local labor markets more concentrated, but this does not significantly reduce overall wages. Instead, the main reason wages fall after trade deals is that labor itself becomes less valuable.

Economists and trade negotiators have long debated how trade deals affect workers' wages. This paper shows that the common idea about employer concentration driving wage cuts is mostly wrong. It turns out, the actual problem is that trade makes workers' output less valuable, which is a different problem to solve.