Trade Liberalization and the Evolution of Skill Earnings Differentials in Brazil

Gustavo Gonzaga, Naercio Menezes-Filho and Cristina Terra

No 216, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano

Abstract: Skilled labor earnings differentials decreased during the trade liberalization implemented in Brazil from 1988 to 1995. This paper investigates the role of trade liberalization in explaining these relative earnings movements. We perform several independent empirical exercises that check the traditional trade transmission mechanism, using disaggregated data on tariffs, prices, wages, employment and skill intensity. We find that: i)employment shifted from skilled to unskilled intensive sectors, and each sector increased its relative share of skilled labor; ii) relative prices fell in skill intensive sectors; iii) tariff changes across sectors were not related to skill intensities, but the pass-through from tariffs to prices was larger in skill intensive sectors; iv) the decline in skilled earnings differentials mandated by the price variation predicted by trade is very close to the observed one. The results are compatible with trade liberalization accounting for the observed relative earnings changes in Brazil.

Keywords: Skill Earnings Differentials; Trade Liberalization; Tariffs Pass-through; Stolper-Samuelson (search for similar items in EconPapers)
JEL-codes: F13 J31 (search for similar items in EconPapers)
Pages: 37
Date: 2006-06-23
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (101)

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Related works:
Journal Article: Trade liberalization and the evolution of skill earnings differentials in Brazil (2006)
Working Paper: Trade liberalization and the evolution of skill earnings differentials in Brazil (2005)
Working Paper: Trade liberalization and the evolution of skill earnings differentials in Brazil (2005)
Working Paper: Trade liberalization and the evolution of skill earnings differentials in Brazil (2002)
Working Paper: Trade liberalization and evolution of skill earnings differentials in Brazil (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:csl:devewp:216

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