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The rise of China and labor market adjustments in Latin America

Author

Listed:
  • Artuc,Erhan
  • Lederman,Daniel
  • Rojas Alvarado,Luis Diego
  • Artuc,Erhan
  • Lederman,Daniel
  • Rojas Alvarado,Luis Diego

Abstract

This paper assesses the impact of the rise of China on the trade of Latin American and Caribbean economies. The study proposes an index to measure the impact on trade, which suggests sizable effects, especially in Argentina, Brazil, Chile, Honduras, Mexico, and Paraguay. The paper uses the index and a model of labor mobility, to calculate the impact of China's growth on labor markets in Argentina, Brazil, and Mexico. The resulting evidence suggests that the rise of China has had positive effects on agriculture and mining in Argentina and Brazil, which offset negative impacts on manufacturing industries, thus leaving total employment and real wages virtually unchanged in the long run. In contrast, the estimated impacts of China's rise on Mexico imply that the sizable shock to manufacturing was not offset by the positive shocks on mining and agriculture, reducing employment in the long run. The paper also discusses the effect of China on the degree of informality in these three economies and contrasts short-run and long-run effects on employment and wages across industries.

Suggested Citation

  • Artuc,Erhan & Lederman,Daniel & Rojas Alvarado,Luis Diego & Artuc,Erhan & Lederman,Daniel & Rojas Alvarado,Luis Diego, 2015. "The rise of China and labor market adjustments in Latin America," Policy Research Working Paper Series 7155, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7155
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    References listed on IDEAS

    as
    1. S.K. Bhutani, 2009. "China and India," India Quarterly: A Journal of International Affairs, , vol. 65(4), pages 383-391, October.
    2. Castro, Lucio & Olarreaga, Marcelo & Saslavsky, Daniel, 2006. "The impact of trade with China and India on Argentina’s manufacturing employment," MPRA Paper 538, University Library of Munich, Germany.
    3. repec:idb:brikps:9168 is not listed on IDEAS
    4. V. Joseph Hotz & Robert A. Miller, 1993. "Conditional Choice Probabilities and the Estimation of Dynamic Models," Review of Economic Studies, Oxford University Press, vol. 60(3), pages 497-529.
    5. Kyle Handley & Nuno Limão, 2013. "Policy Uncertainty, Trade and Welfare: Theory and Evidence for China and the U.S," NBER Working Papers 19376, National Bureau of Economic Research, Inc.
    6. Benedikt Heid & Mario Larch & Alejandro Riaño, 2011. "Maquiladoras and Informality: A Mixed Blessing," CESifo Working Paper Series 3689, CESifo Group Munich.
    7. Finger, J M & Kreinin, M E, 1979. "A Measure of 'Export Similarity' and Its Possible Uses," Economic Journal, Royal Economic Society, vol. 89(356), pages 905-912, December.
    8. Angel-Urdinola, Diego F. & Tanabe, Kimie, 2012. "Micro-determinants of informal employment in the Middle East and North Africa region," Social Protection Discussion Papers and Notes 66594, The World Bank.
    9. Sanjaya Lall & John Weiss, 2004. "People's Republic of China's Competitive Threat to Latin America: An Analysis for 1990-2002," IDB Publications (Working Papers) 46578, Inter-American Development Bank.
    Full references (including those not matched with items on IDEAS)

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