Trade liberalization and evolution of skill earnings differentials in Brazil

Gustavo Gonzaga, Naercio Menezes-Filho and Cristina Terra

No 463, Textos para discussão from Department of Economics PUC-Rio (Brazil)

Abstract: From 1988 to 1995, when trade liberalization was implemented in Brazil, relative earnings of skilled workers decreased. In this paper, we in-vestigate the role of trade liberalization in explaining these relative earn-ings movements, by checking all the steps predicted by the Heckscher-Ohlin- style trade transmission mechanism. 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) tari .changes across sectors were not related to skill inten-sities, but the pass-through from tari .s to prices was stronger in skill intensive sectors; iv) the decline in skilled earnings di .erentials 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: earnings inequality; trade liberalization (search for similar items in EconPapers)
JEL-codes: F13 J31 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2002-09
New Economics Papers: this item is included in nep-lam
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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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 (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)
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