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Informal Jobs and Trade Liberalisation in Argentina

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  • Pablo Acosta
  • Gabriel Montes-Rojas

Abstract

Rapid trade liberalisation can exert profound effects on labour markets. Domestic firms, to sustain competitiveness for survival, could react by cutting labour benefits to achieve cost reductions. Alternatively, trade liberalisation may alter the industry composition of firms, changing the aggregate formality rates. This paper studies the relationship between trade liberalisation and informality in Argentina. Using manufacturing industry-level data for 1992-2003, the results confirm the hypothesis that trade increases informality in industries that experience sudden foreign competition. This explains about a third of the increase in informality. Sectors with higher investment ratios are able to neutralise and reverse this effect.

Suggested Citation

  • Pablo Acosta & Gabriel Montes-Rojas, 2014. "Informal Jobs and Trade Liberalisation in Argentina," Journal of Development Studies, Taylor & Francis Journals, vol. 50(8), pages 1104-1118, August.
    • Handle: RePEc:taf:jdevst:v:50:y:2014:i:8:p:1104-1118
    DOI: 10.1080/00220388.2014.919381
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    Cited by:

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    3. Tanaka, Kiyoyasu & Greaney, Theresa M., 2024. "Trade and employment in the formal and informal sectors: A natural experiment from Cambodia," Journal of Asian Economics, Elsevier, vol. 90(C).
    4. Paz, Lourenco, 2012. "The impacts of trade liberalization on informal labor markets: an evaluation of the Brazilian case," MPRA Paper 38858, University Library of Munich, Germany.
    5. Ritabrata Bose & K.V. Ramaswamy, 2020. "Globalization and workforce composition in Indian formal manufacturing: New evidence on product market competition channel," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2020-036, Indira Gandhi Institute of Development Research, Mumbai, India.
    6. Paz, Lourenço S., 2014. "The impacts of trade liberalization on informal labor markets: A theoretical and empirical evaluation of the Brazilian case," Journal of International Economics, Elsevier, vol. 92(2), pages 330-348.
    7. Maria Celeste Gomez & Maria Enrica Virgillito, 2022. "Wages and productivity in Argentinian manufacturing. A structuralist and distributional firm-level analysis," LEM Papers Series 2022/37, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    8. Guillermo Cruces & Guido Porto & Mariana Viollaz, 2018. "Trade liberalization and informality in Argentina: exploring the adjustment mechanisms," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 27(1), pages 1-29, December.
    9. Pham Phuong Ngoc & Dainn Wie, 2023. "Impact of the US-China Trade War on Vietnam’s Labor Market," GRIPS Discussion Papers 23-09, National Graduate Institute for Policy Studies.
    10. Camila Cisneros-Acevedo, 2021. "Unfolding Trade Effect in Two Margins of Informality. The Peruvian Case," CESifo Working Paper Series 9114, CESifo.
    11. repec:grm:ecoyun:202005 is not listed on IDEAS
    12. HAYAKAWA,Kazunobu & KEOLA, Souknilanh & SUDSAWASD, Sasatra & YAMANOUCHI, Kenta, 2024. "International Bridges and Informality," IDE Discussion Papers 914, Institute of Developing Economies, Japan External Trade Organization(JETRO).

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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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