A case study on trade liberalization: Argentina in the 1990s
The link between trade and wages is embodied in the Stolper-Samuelson theorem and its generalizations. The Stolper-Samuelson logic is that trade affects relative factor rewards by changing relative prices. Since in Argentina non-skilled labor was neither as abundant a factor as land nor as scarce as capital it could not be expected to be the big winner in the opening-up process of the Argentine economy nor could it be expected to be a big loser. So, the huge amount of unemployment experienced by the Argentine economy in the 1990s as well as the widening wage gap between skilled and unskilled labor came as a complete surprise. This paper gives some reasons for this unexpected result. In Argentina, trade liberalization meant mainly import liberalization by lowering tariffs that protected labor-intensive industries like textiles. So, the short-run effect was massive destruction of jobs in non-skilled labor-intensive activities. The opening up of the economy significantly lowered the price of capital goods. This encouraged a drastic process of capital for labor substitution as well as promoting an increase in the demand for skilled labor. In those industries in which the import penetration increased the most, the wage inequality widened relatively more between unskilled and skilled workers. The reasons for the persistence of unemployment are discussed, the impact of the increasing unemployment and growing inequality in wage distribution on income distribution is analyzed, the alternatives of shock therapy vs. gradualism are discussed and finally some general conclusions are drawn from the analysis of the Argentine case.
|Date of creation:||2012|
|Contact details of provider:|| Postal: Kiellinie 66, D-24105 Kiel|
Phone: +49 431 8814-1
Fax: +49 431 8814528
Web page: http://www.economics-ejournal.org/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Larch Mario & Lechthaler Wolfgang, 2011.
"Comparative Advantage and Skill-Specific Unemployment,"
The B.E. Journal of Economic Analysis & Policy,
De Gruyter, vol. 11(1), pages 1-58, April.
- Larch, Mario & Lechthaler, Wolfgang, 2009. "Comparative advantage and skill-specific unemployment," Kiel Working Papers 1538, Kiel Institute for the World Economy (IfW).
- Mario Larch & Wolfgang Lechthaler, 2009. "Comparative Advantage and Skill-Specific Unemployment," CESifo Working Paper Series 2754, CESifo Group Munich.
- Mario Larch & Wolfgang Lechthaler, 2009. "Comparative Advantage and Skill-specific Unemployment," Kiel Working Papers 1538, Kiel Institute for the World Economy.
- Tommasi, Mariano & Velasco, Andres, 1995.
"Where are we in the Political Economy of Reform?,"
95-20, C.V. Starr Center for Applied Economics, New York University.
- Mariano Tommasi, 1995. "Where are we in the Political Economy of Reform?," UCLA Economics Working Papers 733, UCLA Department of Economics.
- Mariano Tommasi & Andres Velasco, 1995. "Where Are We in the Political Economy of Reform?," Working Papers 11, Universidad de San Andres, Departamento de Economia, revised Apr 1996.
- Lamo, Ana & Messina, Julián & Wasmer, Etienne, 2010.
"Are Specific Skills an Obstacle to Labor Market Adjustment?,"
IZA Discussion Papers
5250, Institute for the Study of Labor (IZA).
- Lamo, Ana & Messina, Julián & Wasmer, Etienne, 2011. "Are specific skills an obstacle to labor market adjustment?," Labour Economics, Elsevier, vol. 18(2), pages 240-256, April.
- Gabriel J Felbermayr & Julien Prat & Hans-Jörg Schmerer, 2009.
"Trade and Unemployment: What do the data say?,"
Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim
310/2009, Department of Economics, University of Hohenheim, Germany.
- Felbermayr, Gabriel & Prat, Julien & Schmerer, Hans-Jörg, 2009. "Trade and Unemployment: What Do the Data Say?," IZA Discussion Papers 4184, Institute for the Study of Labor (IZA).
- Felbermayr, Gabriel & Prat, Julien & Schmerer, Hans-Jörg, 2011. "Trade and unemployment: What do the data say?," Munich Reprints in Economics 20381, University of Munich, Department of Economics.
- Meza, Felipe & Urrutia, Carlos, 2011.
"Financial liberalization, structural change, and real exchange rate appreciations,"
Journal of International Economics,
Elsevier, vol. 85(2), pages 317-328.
- Felipe Meza & Carlos Urrutia, 2010. "Financial Liberalization, Structural Change, and Real Exchange Rate Appreciations," IMF Working Papers 10/63, International Monetary Fund.
- Carlos Arteta & Barry Eichengreen & Charles Wyplosz, 2001.
"When Does Capital Account Liberalization Help More than It Hurts?,"
NBER Working Papers
8414, National Bureau of Economic Research, Inc.
- Arteta, Carlos & Eichengreen, Barry & Wyplosz, Charles, 2001. "When Does Capital Account Liberalization Help More Than it Hurts?," CEPR Discussion Papers 2910, C.E.P.R. Discussion Papers.
- Dimitri B. Papadimitriou, 2008. "Promoting Equality Through an Employment of Last Resort Policy," Economics Working Paper Archive wp_545, Levy Economics Institute.
- Reinhart, Carmen & Calvo, Guillermo & Leiderman, Leonardo, 1992. "Capital Inflows and Real Exchange Rate Appreciation in Latin America," MPRA Paper 13843, University Library of Munich, Germany.
- Anne O. Krueger, 1983. "Trade and Employment in Developing Countries, Volume 3: Synthesis and Conclusions," NBER Books, National Bureau of Economic Research, Inc, number krue83-1, Enero.
- Dutt, Pushan & Mitra, Devashish & Ranjan, Priya, 2009.
"International trade and unemployment: Theory and cross-national evidence,"
Journal of International Economics,
Elsevier, vol. 78(1), pages 32-44, June.
- Pushan Dutt & Devashish Mitra & Priya Ranjan, 2007. "International Trade and Unemployment: Theory and Cross-National Evidence," Working Papers 070808, University of California-Irvine, Department of Economics.
- Ben Kriechel & Gerard Pfann, 2005. "The role of specific and general human capital after displacement," Education Economics, Taylor & Francis Journals, vol. 13(2), pages 223-236.
- repec:ilo:empstr:2005-15 is not listed on IDEAS
- Dubra, Juan & Echenique, Federico & Manelli, Alejandro, 2007.
"English auctions and the Stolper-Samuelson theorem,"
8218, University Library of Munich, Germany.
- Dubra, Juan & Echenique, Federico & Manelli, Alejandro M., 2009. "English auctions and the Stolper-Samuelson theorem," Journal of Economic Theory, Elsevier, vol. 144(2), pages 825-849, March.
- Werner Baer & Pedro Elosegui & Andres Gallo, 2002. "The Achievements and Failures of Argentina's Neo-liberal Economic Policies," Oxford Development Studies, Taylor & Francis Journals, vol. 30(1), pages 63-85.
- Leonardo Gasparini & Mariana Marchionni & Walter Sosa Escudero, 2000. "Characterization of inequality changes through microeconometric decompositions. The case of Greater Buenos Aires," Department of Economics, Working Papers 025, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata.
- Donald R. Davis, 1996.
"Trade Liberalization and Income Distribution,"
NBER Working Papers
5693, National Bureau of Economic Research, Inc.
- Donald R. Davis, 1996. "Trade Liberalization and Income Distribution," Harvard Institute of Economic Research Working Papers 1769, Harvard - Institute of Economic Research.
- Pabo Sanguinetti & Sebastian Galiani, 2003.
"The impact of trade liberalizationon wage inequality:Evidence from Argentina,"
Department of Economics Working Papers
011, Universidad Torcuato Di Tella.
- Galiani, Sebastian & Sanguinetti, Pablo, 2003. "The impact of trade liberalization on wage inequality: evidence from Argentina," Journal of Development Economics, Elsevier, vol. 72(2), pages 497-513, December.
- Sebastian Galiani & Pablo Sanguinetti, 2003. "The Impact of Trade Liberalization on Wage Inequality: Evidence from Argentina," Working Papers 65, Universidad de San Andres, Departamento de Economia, revised Oct 2003.
- Olivier Blanchard & Justin Wolfers, 1999.
"The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence,"
NBER Working Papers
7282, National Bureau of Economic Research, Inc.
- Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages 1-33, March.
When requesting a correction, please mention this item's handle: RePEc:zbw:ifwedp:20123. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.