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Is Not Work, It Is Capital: Reallocation Of Inputs After Trade Liberalization In Brazil

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  • Adriana Schor

    (Universidade de São Paulo)

Abstract

Traditional trade models predict that trade liberalization leads to labor reallocation towards sectors in which the country has comparative advantage. However, the empirical literature has failed to provide evidence in favor of such predictions. This paper shows that trade liberalization did in fact lead to input reallocation – not of labor, but of capital. Brazilian firms in sectors which faced higher tariff reduction are those which increased most its capital stock. This kind of adjustment, the paper argues, might be able to explain the robust finding in the literature that trade liberalization induces firm’s productivity growth.

Suggested Citation

  • Adriana Schor, 2014. "Is Not Work, It Is Capital: Reallocation Of Inputs After Trade Liberalization In Brazil," Revista de Economia Mackenzie (REM), Mackenzie Presbyterian University, Social and Applied Sciences Center, vol. 12(1), pages 181-199, 2014-2015.
    • Handle: RePEc:aft:journl:v:12:1:2014:2015:p:181-199
    DOI: -
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