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Trade, Labor Market Concentration, and Wages

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  • Mayara Felix

Abstract

I estimate the effect of trade on local labor market concentration and its implications for wages using employer-employee linked data and tariff shocks from Brazil’s trade liberalization. Trade increased concentration by 7%, an effect driven by firm exit and worker flows to surviving import-competing firms. Increased concentration reduced wage take-home shares—estimated at 50 cents on the dollar pre-shock—enough to offset small wage gains from reallocation, but did not meaningfully reduce wages on net. Most of the wage declines attributed to Brazil's trade liberalization resulted instead from reductions in the marginal revenue product of labor. Incorporating informality reveals substantial regional heterogeneity.

Suggested Citation

  • Mayara Felix, 2026. "Trade, Labor Market Concentration, and Wages," NBER Working Papers 35018, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:35018
    Note: DEV ITI EEE
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    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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