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Trade and Workforce Changeover in Brazil


  • Muendler, Marc-Andreas


Linked employer-employee data for Brazil over a period of large-scale trade liber- alization document two salient workforce changeovers. Within the traded-goods sector, there is a marked occupation downgrading and a simultaneous education upgrading by which employers ¯ll expanding low-skill intensive occupations with increasingly educated jobholders. Between sectors, there is a labor demand shift towards the least and the most skilled, which can be traced back to rela- tively weaker declines of traded-goods industries that intensely use low-skilled labor and to relatively stronger expansions of nontraded-output industries that intensely use high-skilled labor. Whereas these observations are broadly consis- tent with predictions of Heckscher-Ohlin trade theory for a low-skill abundant economy, classic trade theory is a less useful guide to the observed reallocation pattern. Establishment-level regressions show that exporters exhibit signi¯cant employment downsizing. Workforce changeovers are neither achieved through worker reassignments to new tasks within employers nor are they brought about by reallocations across employers and traded-goods industries. Instead, trade- exposed industries shrink their workforces by dismissing less-schooled workers more frequently than more-schooled workers especially in skill-intensive occupa- tions, while most displaced workers shift to nontraded-output industries or out of recorded employment. It remains an important task for research to analyze the impact of economic reform on worker separations, accessions and spell durations outside employment at the individual worker level.

Suggested Citation

  • Muendler, Marc-Andreas, 2007. "Trade and Workforce Changeover in Brazil," University of California at San Diego, Economics Working Paper Series qt7dz2x536, Department of Economics, UC San Diego.
  • Handle: RePEc:cdl:ucsdec:qt7dz2x536

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    References listed on IDEAS

    1. Gonzaga, Gustavo & Menezes Filho, Naercio & Terra, Cristina, 2006. "Trade liberalization and the evolution of skill earnings differentials in Brazil," Journal of International Economics, Elsevier, vol. 68(2), pages 345-367, March.
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    7. Marc-Andreas Muendler, 2004. "Trade, Technology, and Productivity: A Study of Brazilian Manufacturers, 1986-1998," CESifo Working Paper Series 1148, CESifo Group Munich.
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    Cited by:

    1. Edinaldo Tebaldi & Jongsung Kim, 2010. "Two Tales on the Returns to Education: The Impact of Trade on Wages," Review of Development Economics, Wiley Blackwell, vol. 14(4), pages 768-782, November.
    2. Túlio A. Cravo, 2010. "SMEs and economic growth in the Brazilian micro-regions," Papers in Regional Science, Wiley Blackwell, vol. 89(4), pages 711-734, November.
    3. Túlio Cravo & Adrian Gourlay & Bettina Becker, 2012. "SMEs and regional economic growth in Brazil," Small Business Economics, Springer, vol. 38(2), pages 217-230, February.
    4. Túlio Cravo, 2011. "Regional Economic Growth and SMEs in Brazil: a Spatial Analysis (Submission for the Refereed Y-session Papers)," ERSA conference papers ersa10p508, European Regional Science Association.
    5. Carl Davidson & Steven J. Matusz, 2010. "Our Motivation," Introductory Chapters,in: International Trade with Equilibrium Unemployment Princeton University Press.
    6. Daniel Baumgarten, 2015. "International trade and worker flows: empirical evidence for Germany," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(3), pages 589-608, August.

    More about this item


    international trade; labor demand and turnover; linked employer-employee data;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs


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