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Labor Reallocation in Response to Trade Reform

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Author Info
Marc-Andreas Muendler (University of California, San Diego)

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Abstract

Tracking individual workers across employers and industries after Brazil's trade liberalization in the 1990's shows that foreign import penetration and tariff reductions trigger worker displacements but that neither comparative-advantage industries nor exporters absorb displaced workers for years. There are significantly more displacements and fewer accessions in comparative-advantage industries and at exporters. These findings are robust to instrumenting trade barriers and export status with product demand at Brazil's export destinations and real exchange rate components. Worker effects are important predictors of labor turnover. Trade liberalization is assoicated with significantly more transitions to informal work status and self-employment. Output is reallocated to more productive firms but, given fast labor-productivity growth, this product reallocationi is not accompanied by similar labor reallocation.

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Paper provided by Department of Economics, UC San Diego in its series University of California at San Diego, Economics Working Paper Series with number 2007-02.

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Date of creation: 01 Feb 2007
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Handle: RePEc:cdl:ucsdec:2007-02

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Keywords: international trade factor reallocation labor demand and turnover linked employer-employee data

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  6. Marcela Eslava & John Haltiwanger & Adriana Kugler & Maurice Kugler, 2004. "The Effects of Structural Reforms on Productivity and Profitability Enhancing Reallocation: Evidence from Colombia," Economics Working Papers 763, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  7. G. Steven Olley & Ariel Pakes, 1992. "The Dynamics of Productivity in the Telecommunications Equipment Industry," NBER Working Papers 3977, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  25. repec:rus:hseeco:122439 is not listed on IDEAS
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Johannes Van Biesebroeck, 2007. "Wage and Productivity Premiums in Sub-Saharan Africa," NBER Working Papers 13306, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Menezes Filho, N. A. & Giovannetti, Bruno, 2006. "Trade Liberalization and Demand for Skill in Brazil," Ibmec Working Papers wpe_55, Ibmec Working Paper, Ibmec São Paulo. [Downloadable!]
  3. Johannes Van Biesebroeck, 2007. "Wages Equal Productivity. Fact or Fiction?," Working Papers tecipa-294, University of Toronto, Department of Economics. [Downloadable!]
    Other versions:
  4. Naerico Filho & Marc-Andreas Muendler & Garey Ramey, 2006. "The Structure of Worker Compensation in Brazil, With a Comparison to France and the United States," University of California at San Diego, Economics Working Paper Series 2005-01R2, Department of Economics, UC San Diego. [Downloadable!]
    Other versions:
  5. Menezes Filho, N. A. & Menezes Filho, N. A., 2007. "The Structure of Worker Compensation in Brazil, With a Comparison to France and the United States," Ibmec Working Papers wpe_76, Ibmec Working Paper, Ibmec São Paulo. [Downloadable!]
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