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The Impact of Trade Liberalization on Employment, Capital, and Productivity Dynamics: Evidence from the Uruguayan Manufacturing Sector

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  • Carlos Casacuberta
  • Gabriela Fachola
  • Nestor Gandelman

Abstract

This paper studies the impact of trade liberalization on labor and capital gross flows and productivity in the Uruguayan manufacturing sector. Uruguay opened its economy in the presence of -at least initially- strong unions and structurally different industry concentration levels. Higher international exposure implied slightly higher job creation and an important increase in job and capital destruction. Unions were able to dampen this effect. Although not associated with higher creation rates, unions were effective in reducing job and capital destruction. Industry concentration also was found to mitigate the destruction of jobs but had no effect on job creation or capital dynamics. The changes in the use of labor and capital were accompanied by an increase in total factor productivity, especially in sectors where tariff reductions were larger and unions were not present. The authors found no evidence of varying productivity dynamics across different industry concentration levels.

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Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 3170.

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Date of creation: Apr 2004
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Handle: RePEc:idb:wpaper:3170
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Cited by:

  1. Castro, Lucio & Saslavsky, Daniel, 2008. "Trade with China and India and Manufacturing Labour Demand in Argentina," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  2. Daniel Lederman & Marcelo Olarreaga & Guillermo E. Perry, 2009. "China's and India's Challenge to Latin America : Opportunity or Threat?," World Bank Publications, The World Bank, number 2591.
  3. Carlos Casacuberta & Néstor Gandelman, 2012. "Protection, Openness, and Factor Adjustment: Evidence from the Manufacturing Sector in Uruguay," Economic Development and Cultural Change, University of Chicago Press, vol. 60(3), pages 597 - 629.
  4. Mitra, Arup, 2013. "Can industry be the key to pro-poor growth? : An exploratory analysis for India," ILO Working Papers 484346, International Labour Organization.
  5. Héctor Salgado Banda & Lorenzo E. Bernal Verdugo, 2007. "Multifactor Productivity and its Determinants: Al Empirical Analysis for Mexican Manufacturing," Working Papers 2007-09, Banco de México.
  6. Silvia Adriana Peluffo Geronazzo, 2016. "Increased trade openness, productivity, employment and wages: a difference-in-differences approach," Estudios Regionales en Economía, Población y Desarrollo. Cuadernos de Trabajo de la Universidad Autónoma de Ciudad Juárez. 32, Cuerpo Académico 41 de la Universidad Autónoma de Ciudad Juárez, revised 01 Apr 2016.
  7. Haltiwanger, John & Kugler, Adriana & Kugler, Maurice & Micco, Alejandro & Pagés, Carmen, 2004. "Effects of tariffs and real exchange rates on job reallocation: evidence from Latin America," Discussion Paper Series In Economics And Econometrics 0410, Economics Division, School of Social Sciences, University of Southampton.
  8. Ligia Melo & Carlos Ballesteros, 2014. "The impact of external factors on job creation and destruction in the Colombian manufacturing sector," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 81, pages 155-186, Julio - D.
  9. Carlos Casacuberta & Dayna Zaclicever, 2015. "The Effect of Trade Protection on Productivity in Uruguay," Documentos de Trabajo (working papers) 0215, Department of Economics - dECON.

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