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Trade liberalization and labor market adjustment in Brazil

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Listed author(s):
  • Pavcnik, Nina
  • Blom, Andreas
  • Goldberg, Pinelopi
  • Schady, Norbert

Abstract

The authors study the impact of the 1988-94 trade liberalization in Brazil on wage distribution. They explore three main channels through which trade liberalization could have affected wage distribution: (1) increasing returns to skilled workers because of Hecksher-Ohlin adjustments to trade policy; (2) trade-induced skill-biased technological change; and (3) changes in industry wage premiums. The results suggest that trade reform inBrazil did contribute to the growing skill premium through skill-biased technological change, which was partially instigated by increased foreign competition. The authors also find that sector-specific returns to skill increased more in sectors with bigger tariff reductions. But they find little support for Hecksher-Ohlin type adjustments to trade reform. Overall, the effects of trade reform on wage inequality seem relatively small.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2982.

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Date of creation: 31 Mar 2003
Handle: RePEc:wbk:wbrwps:2982
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Keywords: Water and Industry; Municipal Financial Management; Health Monitoring&Evaluation; Environmental Economics&Policies; Public Health Promotion; Municipal Financial Management; Health Monitoring&Evaluation; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Environmental Economics&Policies; Water and Industry;

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