Labor Reallocation in Response to Trade Reform

Marc-Andreas Muendler

University of California at San Diego, Economics Working Paper Series from Department of Economics, UC San Diego

Abstract: Tracking individual workers across employers and industries after Brazil's trade liberalization in the 1990's shows that foreign import penetration and tariff reductions trigger worker displacements but that neither comparative-advantage industries nor exporters absorb displaced workers for years. There are significantly more displacements and fewer accessions in comparative-advantage industries and at exporters. These findings are robust to instrumenting trade barriers and export status with product demand at Brazil's export destinations and real exchange rate components. Worker effects are important predictors of labor turnover. Trade liberalization is assoicated with significantly more transitions to informal work status and self-employment. Output is reallocated to more productive firms but, given fast labor-productivity growth, this product reallocationi is not accompanied by similar labor reallocation.

Keywords: international trade; factor reallocation; labor demand and turnover; linked employer-employee data (search for similar items in EconPapers)
Date: 2007-02-01
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Citations: View citations in EconPapers (47)

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Related works:
Working Paper: Labor Reallocation in Response to Trade Reform (2011)
Working Paper: Labor Reallocation in Response to Trade Reform (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:cdl:ucsdec:qt3cm38535

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