Export Markets and Labor Allocation in a Low-income Country

Brian McCaig and Nina Pavcnik

No 20455, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the effects of a positive export shock on labor allocation between the informal, microenterprise sector and the formal firm sector in a low-income country. The U.S.-Vietnam Bilateral Trade Agreement led to large reductions in U.S. tariffs on Vietnamese exports. We find that the share of manufacturing workers in Vietnam in the formal sector increased by 5 percentage points in response to the U.S. tariff reductions. The reallocation was greater for workers in more internationally integrated provinces and for younger cohorts. We estimate the gap in labor productivity within manufacturing across the informal and formal sectors. This gap and the aggregate labor productivity gain from the export-induced reallocation of workers across the two sectors are reduced when we account for worker heterogeneity, measurement error, and differences in labor intensity of production.

JEL-codes: F14 F16 O17 O47 (search for similar items in EconPapers)
Date: 2014-09
New Economics Papers: this item is included in nep-int and nep-sea
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Citations: View citations in EconPapers (49)

Published as American Economic Review (Forthcoming)

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Journal Article: Export Markets and Labor Allocation in a Low-Income Country (2018)
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