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Trade Liberalization, Employment Flows and Wage Inequality in Brazil

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Author Info
Ferreira, Francisco H.G.
Leite, Phillippe G.
Wai-Poi, Matthew

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Abstract

Using nationally representative, economy-wide data, this paper investigates the relative importance of trade-mandated effects on industry wage premiums; industry and economy-wide skill premiums; and employment flows in accounting for changes in the wage distribution in Brazil during the 1988-95 trade liberalization. Unlike in other Latin American countries, trade liberalization appears to have made a significant contribution towards a reduction in wage inequality. These effects have not occurred through changes in industry-specific (wage or skill) premiums. Instead, they appear to have been channelled through substantial employment flows across sectors and formality categories. Changes in the economy-wide skill premium are also important.

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File URL: http://www.wider.unu.edu/stc/repec/pdfs/rp2007/rp2007-58.pdf
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Publisher Info
Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Papers with number UNU-WIDER Research Paper RP2007/58.

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Length: 48 pages
Date of creation: 2007
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Handle: RePEc:unu:wpaper:rp2007-58

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Related research
Keywords: trade liberalization; inequality; employment flows; Brazil;

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References listed on IDEAS
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. Linda S. Goldberg, 2004. "Industry-specific exchange rates for the United States," Economic Policy Review, Federal Reserve Bank of New York, issue May, pages 1-16. [Downloadable!]
  2. Revenga, Ana, 1997. "Employment and Wage Effects of Trade Liberalization: The Case of Mexican Manufacturing," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages S20-43, July. [Downloadable!] (restricted)
  3. Verhoogen, Eric A., 2007. "Trade, Quality Upgrading and Wage Inequality in the Mexican Manufacturing Sector," CEPR Discussion Papers 6385, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. Pinelopi K. Goldberg & Nina Pavcnik, 2004. "Trade, Inequality, and Poverty: What Do We Know? Evidence from Recent Trade Liberalization Episodes in Developing Countries," NBER Working Papers 10593, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Edwards, Sebastian, 1998. "Openness, Productivity and Growth: What Do We Really Know?," Economic Journal, Royal Economic Society, vol. 108(447), pages 383-98, March. [Downloadable!] (restricted)
    Other versions:
  6. Ferreira, Francisco H. G. & Leite, Phillippe G. & Litchfield, Julie A., 2006. "The rise and fall of Brazilian inequality, 1981-2004," Policy Research Working Paper Series 3867, The World Bank. [Downloadable!]
    Other versions:
  7. Wood, Adrian, 1997. "Openness and Wage Inequality in Developing Countries: The Latin American Challenge to East Asian Conventional Wisdom," World Bank Economic Review, Oxford University Press, vol. 11(1), pages 33-57, January.
  8. L. Alan Winters & Neil McCulloch & Andrew McKay, 2004. "Trade Liberalization and Poverty: The Evidence So Far," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 72-115, March. [Downloadable!] (restricted)
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    Other versions:
  10. Beyer, Harald & Rojas, Patricio & Vergara, Rodrigo, 1999. "Trade liberalization and wage inequality," Journal of Development Economics, Elsevier, vol. 59(1), pages 103-123, June. [Downloadable!] (restricted)
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    Other versions:
  14. Francisco de Hollanda Guimarães Ferreira & Ricardo Paes de Barros, 1999. "The slippery slope: explaining the increase in extreme poverty in urban Brazil, 1976-1996," Textos para discussão 404, Department of Economics PUC-Rio (Brazil). [Downloadable!]
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  17. Ravallion, Martin & Chen, Shaohua, 2003. "Measuring pro-poor growth," Economics Letters, Elsevier, vol. 78(1), pages 93-99, January. [Downloadable!] (restricted)
    Other versions:
  18. Mathias Thoenig & Thierry Verdier, 2003. "A Theory of Defensive Skill-Biased Innovation and Globalization," American Economic Review, American Economic Association, vol. 93(3), pages 709-728, June. [Downloadable!]
    Other versions:
  19. Nina Pavcnik & Andreas Blom & Pinelopi Goldberg & Norbert Schady, 2004. "Trade Liberalization and Industry Wage Structure: Evidence from Brazil," World Bank Economic Review, Oxford University Press, vol. 18(3), pages 319-344.
  20. Cragg, Michael Ian & Epelbaum, Mario, 1996. "Why has wage dispersion grown in Mexico? Is it the incidence of reforms or the growing demand for skills?," Journal of Development Economics, Elsevier, vol. 51(1), pages 99-116, October. [Downloadable!] (restricted)
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Cited by:
(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. Ferreira, Francisco H.G. & Ravallion, Martin, 2008. "Global poverty and inequality : a review of the evidence," Policy Research Working Paper Series 4623, The World Bank. [Downloadable!]
  2. Flôres Junior, Renato Galvão, 2008. "Trade and Poverty in Latin American Countries: Conceptual and Methodological Challenges," Economics Working Papers (Ensaios Economicos da EPGE) 675, Graduate School of Economics, Getulio Vargas Foundation (Brazil). [Downloadable!]
  3. Ferreira, Francisco H. G. & Leite, Phillippe G. & Ravallion, Martin, 2007. "Poverty reduction without economic growth ? explaining Brazil's poverty dynamics, 1985-2004," Policy Research Working Paper Series 4431, The World Bank. [Downloadable!]
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