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Trade liberalization, employment flows, and wage inequality in Brazil

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  • Ferreira, Francisco H. G.
  • Leite, Phillippe G.
  • Wai-Poi, Matthew

Abstract

Using nationally representative, economywide data, this paper investigates the relative importance of trade-mandated effects on industry wage premia; industry and economywide skill premia; and employment flows in accounting for changes in the wage distribution in Brazil during the 1988-95 trade liberalization. Unlike in other Latin American countries, trade liberalization appears to have made a significant contribution toward a reduction in wage inequality. These effects have not occurred through changes in industry-specific (wage or skill) premia. Instead, they appear to have been channeled through substantial employment flows across sectors and formality categories. Changes in the economywide skill premium are also important.

Suggested Citation

  • Ferreira, Francisco H. G. & Leite, Phillippe G. & Wai-Poi, Matthew, 2007. "Trade liberalization, employment flows, and wage inequality in Brazil," Policy Research Working Paper Series 4108, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4108
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    References listed on IDEAS

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    Cited by:

    1. Viviane Azevedo & César P. Bouillon, 2009. "Social Mobility in Latin America: A Review of Existing Evidence," IDB Publications (Working Papers) 1656, Inter-American Development Bank.
    2. repec:unu:wpaper:wp2012-03 is not listed on IDEAS
    3. Mehta, Aashish & Hasan, Rana, 2012. "The effects of trade and services liberalization on wage inequality in India," International Review of Economics & Finance, Elsevier, vol. 23(C), pages 75-90.
    4. Ferreira, Francisco H.G. & Leite, Phillippe G. & Ravallion, Martin, 2010. "Poverty reduction without economic growth?: Explaining Brazil's poverty dynamics, 1985-2004," Journal of Development Economics, Elsevier, vol. 93(1), pages 20-36, September.
    5. Francisco Ferreira, 2010. "Distributions in motion: Economic growth, inequality, and poverty dynamics," Working Papers 183, ECINEQ, Society for the Study of Economic Inequality.
    6. repec:spr:weltar:v:154:y:2018:i:1:d:10.1007_s10290-017-0291-3 is not listed on IDEAS
    7. Nora Lustig & Luis Felipe Lopez-Calva & Eduardo Ortiz-Juarez, 2011. "The decline in inequality in Latin America: How much, since when and why," Working Papers 211, ECINEQ, Society for the Study of Economic Inequality.
    8. Gerardo Esquivel, 2011. "The Dynamics of Income Inequality in Mexico since NAFTA," ECONOMIA JOURNAL, THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA, vol. 0(Fall 2011), pages 155-188, August.
    9. Leonardo Gasparini & Nora Lustig, 2011. "The Rise and Fall of Income Inequality in Latin America," Working Papers 1110, Tulane University, Department of Economics.
    10. Timothy Halliday & Daniel Lederman & Raymond Robertson, 2018. "Tracking wage inequality trends with prices and different trade models: evidence from Mexico," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(1), pages 47-73, February.
    11. repec:ebl:ecbull:eb-17-00091 is not listed on IDEAS
    12. Jayanthakumaran, Kankesu & Sangkaew, Piyapong & O’Brien, Martin, 2013. "Trade liberalisation and manufacturing wage premiums: Evidence from Thailand," Journal of Asian Economics, Elsevier, vol. 29(C), pages 15-23.
    13. Yang Wang, 2015. "Education Expansion and Decline in Tertiary Premium in Brazil: 1995-2013," Working Papers 1525, Tulane University, Department of Economics.
    14. Ana Abras & Renata Narita, 2016. "Informalidade, Desigualdade E Pagamento Por Performance No Brasil," Anais do XLII Encontro Nacional de Economia [Proceedings of the 42ndd Brazilian Economics Meeting] 230, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    15. Ferreira, Francisco H.G. & Ravallion, Martin, 2008. "Global poverty and inequality : a review of the evidence," Policy Research Working Paper Series 4623, The World Bank.
    16. Gasparini, Leonardo & Galiani, Sebastian & Cruces, Guillermo & Acosta, Pablo, 2011. "Educational upgrading and returns to skills in Latin America : evidence from a supply-demand framework, 1990-2010," Policy Research Working Paper Series 5921, The World Bank.
    17. Nathalie Scholl, 2015. "The Impact of Trade on Wage Inequality in Developing Countries: Technology vs. Comparative Advantage," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 190, Courant Research Centre PEG.
    18. Nora Lustig & Jaime Ros, 2011. "Latin America's Economic Challenges: Lessons for Emerging Economies," Working Papers 1112, Tulane University, Department of Economics.
    19. repec:unu:wpaper:wp2012-12 is not listed on IDEAS
    20. Flôres Junior, Renato Galvão, 2008. "Trade and poverty in latin american countries: conceptual and methodological challenges," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 675, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).

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    Keywords

    Economic Theory&Research; Free Trade; Labor Markets; Trade Policy; Trade Law;

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