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Trade and Workforce Changeover in Brazil

  • Marc-Andreas Muendler

Linked employer-employee data for Brazil over a period of large-scale trade liberalization document two salient workforce changeovers. Within the traded-goods sector, there is a marked occupation downgrading and a simultaneous education upgrading by which employers fill 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 relatively 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 consistent 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 significant 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 occupations, 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.

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File URL: http://www.nber.org/papers/w12980.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12980.

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Date of creation: Mar 2007
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Publication status: published as Bender, S., J. Lane, K. Shaw, F. Andersson, and T. von Wachter (eds.) The Analysis of Firms and Employees: Quantitative and Qualitative Approaches, NBER Conference Report. Chicago and London: University of Chicago Press, 2008.
Handle: RePEc:nbr:nberwo:12980
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  1. Terra, Maria Cristina T. & Gonzaga, Gustavo & Menezes Filho, Naércio Aquino, 2002. "Trade Liberalization and the Evolution of Skill Earnings Differentials in Brazil," Economics Working Papers (Ensaios Economicos da EPGE) 457, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
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  9. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, June.
  10. Gustavo Gonzaga, 2003. "Labor Turnover and Labor Legislation in Brazil," JOURNAL OF LACEA ECONOMIA, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
  11. James J. Heckman & Carmen Pagés, 2004. "Introduction to "Law and Employment: Lessons from Latin American and the Caribbean"," NBER Chapters, in: Law and Employment: Lessons from Latin America and the Caribbean, pages 1-108 National Bureau of Economic Research, Inc.
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  14. Filho, Naerico Aquino Menezes & Muendler, Marc-Andreas & Ramey, Garey, 2006. "The Structure of Worker Compensation in Brazil, With a Comparison to France and the United States," University of California at San Diego, Economics Working Paper Series qt8pr105rg, Department of Economics, UC San Diego.
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