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Labor Reallocation in Response to Trade Reform

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Author Info
Naércio Aquino Menezes Filho ()
Marc Andreas Muendler ()

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Abstract

Tracking individual workers across employers and industries after Brazil's trade liberalization in the 1990s 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 associated 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 reallocation is not accompanied by similar labor reallocation.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 1936.

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Date of creation: 2007
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Handle: RePEc:ces:ceswps:_1936

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Related research
Keywords: international trade; factor reallocation; labor demand and turnover; linked employer-employee data;

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Find related papers by JEL classification:
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
J63 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Turnover; Vacancies; Layoffs

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Ricardo Paes de Barros & Carlos Henrique Corseuil, 2004. "The Impact of Regulations on Brazilian Labor Market Performance," NBER Chapters, in: Law and Employment: Lessons from Latin American and the Caribbean, pages 273-350 National Bureau of Economic Research, Inc. [Downloadable!]
    Other versions:
  2. John C. Haltiwanger, 1997. "Measuring and analyzing aggregate fluctuations: the importance of building from microeconomic evidence," Review, Federal Reserve Bank of St. Louis, issue May, pages 55-78. [Downloadable!]
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    Other versions:
  4. Levinsohn, James, 1999. "Employment responses to international liberalization in Chile," Journal of International Economics, Elsevier, vol. 47(2), pages 321-344, April. [Downloadable!] (restricted)
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  8. Goldberg, Pinelopi Koujianou & Pavcnik, Nina, 2003. "The Response of the Informal Sector to Trade Liberalization," CEPR Discussion Papers 3874, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  9. Biscourp, Pierre & Kramarz, Francis, 2007. "Employment, skill structure and international trade: Firm-level evidence for France," Journal of International Economics, Elsevier, vol. 72(1), pages 22-51, May. [Downloadable!] (restricted)
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  11. Wacziarg, Romain & Wallack, Jessica Seddon, 2004. "Trade liberalization and intersectoral labor movements," Journal of International Economics, Elsevier, vol. 64(2), pages 411-439, December. [Downloadable!] (restricted)
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  13. EDUARDO PONTUAL RIBEIRO & CARLOS CORSEUIL & DANIEL SANTOS & PAULO FURTADO & BRUNU AMORIM & LUCIANA SERVO & ANDRÉ SOUZA, 2004. "Trade liberalization, the exchange rate and job flows in Brazil," Journal of Policy Reform, Taylor and Francis Journals, vol. 7(4), pages 209-223, December. [Downloadable!] (restricted)
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  15. Schor, Adriana, 2004. "Heterogeneous productivity response to tariff reduction. Evidence from Brazilian manufacturing firms," Journal of Development Economics, Elsevier, vol. 75(2), pages 373-396, December. [Downloadable!] (restricted)
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    Other versions:
  17. Adriana Schor, 2004. "Heterogeneous Productivity Response to Tariff Reduction: Evidence from Brazilian Manufacturing Firms," NBER Working Papers 10544, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  27. Pavcnik, Nina, 2002. "Trade Liberalization, Exit, and Productivity Improvement: Evidence from Chilean Plants," Review of Economic Studies, Blackwell Publishing, vol. 69(1), pages 245-76, January.
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  28. repec:rus:hseeco:122439 is not listed on IDEAS
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Johannes Van Biesebroeck, 2007. "Wage and Productivity Premiums in Sub-Saharan Africa," NBER Working Papers 13306, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Menezes Filho, N. A. & Giovannetti, Bruno, 2006. "Trade Liberalization and Demand for Skill in Brazil," Ibmec Working Papers wpe_55, Ibmec Working Paper, Ibmec São Paulo. [Downloadable!]
  3. Johannes Van Biesebroeck, 2007. "Wages Equal Productivity. Fact or Fiction?," Working Papers tecipa-294, University of Toronto, Department of Economics. [Downloadable!]
    Other versions:
  4. Naerico Filho & Marc-Andreas Muendler & Garey Ramey, 2006. "The Structure of Worker Compensation in Brazil, With a Comparison to France and the United States," University of California at San Diego, Economics Working Paper Series 2005-01R2, Department of Economics, UC San Diego. [Downloadable!]
    Other versions:
  5. Menezes Filho, N. A. & Menezes Filho, N. A., 2007. "The Structure of Worker Compensation in Brazil, With a Comparison to France and the United States," Ibmec Working Papers wpe_76, Ibmec Working Paper, Ibmec São Paulo. [Downloadable!]
  6. Aguayo-Tellez, Ernesto & Muendler, Marc-Andreas & Poole, Jennifer Pamela, 2008. "Globalization and Formal Sector Migration in Brazil," Working Papers RP2008/22, World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
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