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Increased trade openness, productivity, employment and wages: a difference-in-differences approach

Adriana Peluffo ()

No 32, Estudios Regionales en Economía, Población y Desarrollo. Cuadernos de Trabajo de la Universidad Autónoma de Ciudad Juárez. from Cuerpo Académico 41 de la Universidad Autónoma de Ciudad Juárez

Abstract: This paper analyses the effects of increased competition resulting from the creation of the Southern Common Market (MERCOSUR) on productivity, employment and wages for the Uruguayan manufacturing sector at the plant level. We use impact evaluation techniques, namely regressions and matching and difference-in-differences estimation for the period 1988-1995. One of the most robust findings is that increased trade liberalization seems to improve total factor productivity. Furthermore, we find reductions in employment driven mainly by the decrease in blue collars, increases in wages and a reduction in the wage gap between white and blue collars as a result of increased trade exposure. Thus, the increase in productivity along with the unemployment of unskilled workers would indicate a room for training, labour and social policies in order to countervail the negative impact of trade liberalization on less qualified workers.

Keywords: trade policy; productivity; employment; wages. (search for similar items in EconPapers)
JEL-codes: F13 O12 J2 J3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int, nep-lam and nep-pke
Date: 2016-04-01, Revised 2016-04-01
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