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Effects of tariffs and real exchange rates on job reallocation: evidence from Latin America

Listed author(s):
  • John Haltiwanger
  • Adriana Kugler
  • Maurice Kugler
  • Alejandro Micco
  • Carmen Pages

Openness to international competition can lead to enhanced resource allocation in the end. While factor reallocation is essential if net benefits are to be derived from trade liberalization, the process generates costs both for transitioning workers and for employers undergoing personnel turnover. Net welfare gains depend on adjustment costs. Understanding of these issues has been hampered by data limitations. In this paper, we overcome some of these limitations by using new, harmonized measures on job creation and destruction for a number of countries in Latin America. We use these new series to investigate the impact of the removal of protectionism on net employment and gross job reallocation in Latin America. We find a robust pattern showing that reductions in tariffs and exchange rate appreciations increase the pace of job reallocation within sectors. We also find, however, some evidence of declining net employment growth as trade exposure increases. For example, we find some evidence that in the wake of tariff reductions, there is lower net employment growth.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/1384128042000285183
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Article provided by Taylor & Francis Journals in its journal Journal of Economic Policy Reform.

Volume (Year): 7 (2004)
Issue (Month): 4 ()
Pages: 191-208

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Handle: RePEc:taf:jpolrf:v:7:y:2004:i:4:p:191-208
DOI: 10.1080/1384128042000285183
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  1. Sofronis Clerides & Saul Lach & James Tybout, 1996. "Is "Learning-by-Exporting" Important? Micro-Dynamic Evidence from Colombia, Mexico and Morocco," NBER Working Papers 5715, National Bureau of Economic Research, Inc.
  2. Jose Manuel Campa & Linda S. Goldberg, 1998. "Employment versus wage adjustment and the U.S. dollar," Staff Reports 56, Federal Reserve Bank of New York.
  3. Pierre-Olivier Gourinchas, 1998. "Exchange Rates and Jobs: What Do We Learn from Job Flows?," NBER Working Papers 6864, National Bureau of Economic Research, Inc.
  4. Davis, Steven J. & Haltiwanger, John, 1999. "Gross job flows," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 41, pages 2711-2805 Elsevier.
  5. Bernard, A., 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," Working papers 97-21, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Galindo, Arturo & Panizza, Ugo & Schiantarelli, Fabio, 2003. "Debt composition and balance sheet effects of currency depreciation: a summary of the micro evidence," Emerging Markets Review, Elsevier, vol. 4(4), pages 330-339, December.
  7. Eduardo Pontual Ribeiro & Carlos Corseuil & Daniel Santos & Paulo Furtado & Brunu Amorim & Luciana Servo & Andre Souza, 2004. "Trade liberalization, the exchange rate and job flows in Brazil," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 7(4), pages 209-223.
  8. Mary Hallward-Driemeier & Giuseppe Iarossi & Kenneth L. Sokoloff, 2002. "Exports and Manufacturing Productivity in East Asia: A Comparative Analysis with Firm-Level Data," NBER Working Papers 8894, National Bureau of Economic Research, Inc.
  9. Aw, Bee Yan & Chung, Sukkyun & Roberts, Mark J, 2000. "Productivity and Turnover in the Export Market: Micro-level Evidence from the Republic of Korea and Taiwan (China)," World Bank Economic Review, World Bank Group, vol. 14(1), pages 65-90, January.
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