Import Competition in the Manufacturing Sector in Peru: Its Impact on Informality and Wages

Fernando Morales, Martha Denisse Pierola and Dennis Sanchez-Navarro
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Fernando Morales: World Bank
Dennis Sanchez-Navarro: World Bank

Revista Economía, 2021, vol. 44, issue 88, 45-75

Abstract: This paper studies the impact of import competition from China on labor outcomes in the Peruvian manufacturing sector in 2001–2010. Using data from the Peruvian Household Survey, we use atwo-step procedure to evaluate the impact of the surge in imports from China on the likelihood ofhaving an informal job and on wages in both the formal and informal sectors. On the first step,the results suggest that greater import competition increased—albeit weakly—the likelihood ofhaving an informal job for workers with elementary education. On the second step, we find thatthe surge in imports from China was detrimental to wages of the least educated individuals withinformal jobs—with no education and elementary education—, although we also find that thisresult is mostly driven by the presence of self-employed among informal workers. We also observea wage increase among workers with formal jobs and elementary and high school education. Theseresults are robust to the inclusion of different exclusion restrictions and even after accounting forindustry-level growth which was strong during the period studied

Keywords: Import competition; Informality; Wages (search for similar items in EconPapers)
JEL-codes: F14 F16 J23 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Working Paper: Import Competition in the Manufacturing Sector in Peru: Its Impact on Informality and Wages (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:pcp:pucrev:y:2021:i:88:p:45-75

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