Trade, Labor Market Concentration, and Wages

Mayara Felix

No 35018, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: F16 O1 (search for similar items in EconPapers)
Date: 2026-03
New Economics Papers: this item is included in nep-com, nep-iaf, nep-inv and nep-lma
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