Disaggregating Labor Payments in the GTAP 8 Data Base

Prior to the release of version 4, the GTAP Data Base included three primary factors: agricultural land, capital and labor. In the GTAP 4 Data Base, labor was disaggregated labor into two categories: professional (skilled) and production and farm laborers (unskilled). Subsequent GTAP releases have used the same methodology, updating countries and sectors as required. In 2010, Weingarden and Tsigas (2010) developed a process for imputing wages by occupation and industry using the 2008 ILO Yearbook and a constrained optimization model. The purpose of this paper is to summarize the work undertaken by Weingarden and Tsigas (2010) and outline how this work has been used to update and expand the level of disaggregation of labor in the GTAP 8.1 Data Base to five labor categories. It is expected that these five new labor categories will be formally integrated into the GTAP Data Base in version 9. Finally, the paper also examines how incorporating the new labor data can enhance analysis of labor markets, by demonstrating the macro and labor impacts of a number of illustrative simulations.