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The impact of trade on employment in Colombian


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    This article analyses the impact of imports and exports, from and towards the most important Colombiantrade partners (United States, European Union, China, Andean Community of Nations, Venezuela, Brazil andMexico), on employment in the manufacturing sector during 2000 ‐ 2007. We use the System GMMmethodology to estimate an equation of labor demand as a function of capital, wage, and a measure ofimports and exports. Additionally, we estimate the effects of the share of trade with each trade partner overthe labor demand, and compute interaction variables to analyze changes in the effects of international tradeacross the categories of workers (high and low skilled).Econometric estimations produced, for this period, evidence on inertia in the Colombian labor market. Inaddition, a substitution relationship between capital and labor was also found. Imports showed no or anegative effect over employment depending on the index of imports used. Analyses by destiny and origin oftrade showed that exports to Venezuela and Andean Community of Nations had a negative correlation toemployment. Likewise, we found that only commerce with China had some impact on each manufacturingsubsector employment, depending on the characteristics of the workers (high or low skilled).

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    Paper provided by DEPARTAMENTO NACIONAL DE PLANEACIÓN in its series ARCHIVOS DE ECONOMÍA with number 009227.

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    Length: 26
    Date of creation: 31 Oct 2011
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    Handle: RePEc:col:000118:009227

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    Keywords: International trade; manufacturing sector employment; skilled and unskilled labor; globalization; developing countries; System GMM estimation; panel data.;

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    1. Castro, Lucio & Olarreaga, Marcelo & Saslavsky, Daniel, 2007. "The impact of trade with China and India on Argentina's manufacturing employment," Policy Research Working Paper Series 4153, The World Bank.
    2. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, Elsevier, vol. 87(1), pages 115-143, August.
    3. Orazio Attanasio & Pinelopi Goldberg & Nina Pavcnik, 2003. "Trade Reforms and Wage Inequiality in Colombia," NBER Working Papers 9830, National Bureau of Economic Research, Inc.
    4. Christopher F Baum, 2006. "An Introduction to Modern Econometrics using Stata," Stata Press books, StataCorp LP, number imeus, March.
    5. Kiviet, Jan F., 1995. "On bias, inconsistency, and efficiency of various estimators in dynamic panel data models," Journal of Econometrics, Elsevier, Elsevier, vol. 68(1), pages 53-78, July.
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