Is High-Tech Trade a Threat to Employment in Brazil?

Unemployment is one of the primary economic and social challenges, particularly for developing regions. The automation of processes and production techniques, along with the digitalization of services, has long instigated fear and uncertainty due to their potential to induce what is commonly referred to as “technological unemployment.” From the perspective of international trade, the trade in high-tech products can lead to unemployment regardless of the factor endowments prevalent in the region in question. This paper analyses the effects of traditional and high-tech trade on the Brazilian state’s labor market. We utilized a panel data framework that includes information for the Brazilian states, covering the period from 2000 to 2020, to estimate dynamic labor demand equations using the System-GMM estimator. The results indicate a positive relationship between traditional trade and employment, regardless of the trade proxy adopted and the economic sector investigated. However, this relationship becomes negative when high-tech trade variables are employed. This paper examines how high-tech trade in Brazil impacts employment within a regional and sectoral context, providing important insights for the formulation of public policies aimed at mitigating unemployment.