IDEAS home Printed from https://ideas.repec.org/p/ags/pugtwp/331318.html
   My bibliography  Save this paper

The Effects of Increasing Openness and Integration to the MERCOSUR on the Uruguayan Labour Market: A CGE Modeling Analysis

Author

Listed:
  • Terra, Maria Ines
  • Bucheli, Marisa
  • Laens, Silvia
  • Estrades, Carmen

Abstract

Uruguay is a small economy. Its integration to MERCOSUR has increased the exposure to regional macroeconomic instability. The aim of this paper is to assess the impact of regional integration on the country’s labour market and poverty. We estimated wage differentials between labour categories, finding a 60 percent wage gap between formal and informal workers. A CGE model with an efficiency wage specification for unskilled labour was built, with results showing that regional shocks deeply affect the Uruguayan economy. The consideration of an efficiency wage model is particularly important when shocks lead to a reallocation of resources towards sectors intensive in unskilled labour. A subsidy on formal, unskilled labour could contribute to decrease informality and therefore increase GDP, but this type of policy needs to be carefully implemented because it may have negative effects on investment. Finally, the effects on poverty and income distribution obtained through microsimulations are consistent with the results of the CGE experiments.

Suggested Citation

  • Terra, Maria Ines & Bucheli, Marisa & Laens, Silvia & Estrades, Carmen, 2005. "The Effects of Increasing Openness and Integration to the MERCOSUR on the Uruguayan Labour Market: A CGE Modeling Analysis," Conference papers 331318, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331318
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/331318/files/1807.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    2. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    3. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Flores, Manuel & Cassoni, Adriana, 2008. "Armington elasticities - Estimates for Uruguayan manufacturing sectors," Conference papers 331814, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Estrades, Carmen & Terra, María Inés, 2012. "Commodity prices, trade, and poverty in Uruguay," Food Policy, Elsevier, vol. 37(1), pages 58-66.
    3. Cecilia Llambi & Silvia Laens & Marcelo Perera & Mery Ferrando, 2011. "Assessing the Impact of the 2007 Tax Reform on Povert and Inequality in Uruguay," Working Papers PMMA 2011-14, PEP-PMMA.
    4. Carmen Estrades & María Inés Terra, 2009. "International Commodity Prices, Trade and Poverty in Uruguay," Documentos de Trabajo (working papers) 3209, Department of Economics - dECON.
    5. Maria Laura Alzua & Hernan Ruffo, 2011. "Effects of Argentina's Social Security Reform on Labor Markets and Poverty," Working Papers MPIA 2011-11, PEP-MPIA.
    6. Johan Sandberg, 2012. "Conditional Cash Transfers and Social Mobility: The Role of Asymmetric Structures and Segmentation Processes," Development and Change, International Institute of Social Studies, vol. 43(6), pages 1337-1359, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mahmood Araï & Gérard Ballot & Ali Skalli, 1996. "Différentiels intersectoriels de salaire et caractéristiques des employeurs en France," Économie et Statistique, Programme National Persée, vol. 299(1), pages 37-58.
    2. Arbache, Jorge Saba & Carneiro, Francisco Galrao, 1999. "Unions and Interindustry Wage Differentials," World Development, Elsevier, vol. 27(10), pages 1875-1883, October.
    3. Johannes Gernandt & Friedhelm Pfeiffer, 2006. "Einstiegslöhne bei unvollkommenen Arbeitsmärkten," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(2), pages 147-172, May.
    4. Goto, Jun & Sawada, Yasuyuki & Aida, Takeshi & Aoyagi, Keitaro, 2015. "Incentives and Social Preferences: Experimental Evidence from a Seemingly Inefficienct Traditional Labor Contract," 2015 Conference, August 9-14, 2015, Milan, Italy 211687, International Association of Agricultural Economists.
    5. Jan Kluge & Michael Weber, 2016. "Was erklärt die Lohnunterschiede zwischen Ost- und Westdeutschland?," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 23(02), pages 03-09, April.
    6. Polachek, Solomon W., 2008. "Earnings Over the Life Cycle: The Mincer Earnings Function and Its Applications," Foundations and Trends(R) in Microeconomics, now publishers, vol. 4(3), pages 165-272, April.
    7. Boll, Christina & Hüning, Hendrik & Leppin, Julian & Puckelwald, Johannes, 2015. "Potenzielle Auswirkungen des Mindestlohnes auf den Gender Pay Gap in Deutschland: Eine Simulationsstudie," HWWI Policy Papers 89, Hamburg Institute of International Economics (HWWI).
    8. Christina Boll & Hendrik Hüning & Julian Leppin & Johannes Puckelwald, 2015. "Potential Effects of Statutory Minimum Wage on the Gender Pay Gap: A Simulation-Based Study for Germany," SOEPpapers on Multidisciplinary Panel Data Research 766, DIW Berlin, The German Socio-Economic Panel (SOEP).
    9. Jan Kluge & Michael Weber, 2015. "Decomposing the German East-West wage gap," ifo Working Paper Series 205, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    10. Thomas Leoni, 2010. "Fehlzeitenreport 2009. Krankheits- und unfallbedingte Fehlzeiten in Österreich," WIFO Studies, WIFO, number 39561, June.
    11. Jan Kluge & Michael Weber, 2018. "Decomposing the German East–West wage gap," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(1), pages 91-125, January.
    12. Hummels, David & Klenow, Peter J., 2001. "The Quality and Variety of a Nation's Exports," Conference papers 330896, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    13. Thomas Y. Mathä & Alessandro Porpiglia & Michael Ziegelmeyer, 2014. "Wealth differences across borders and the effect of real estate price dynamics: Evidence from two household surveys," BCL working papers 90, Central Bank of Luxembourg.
    14. Johar, Meliyanni & Soewondo, Prastuti & Pujisubekti, Retno & Satrio, Harsa Kunthara & Adji, Ardi, 2018. "Inequality in access to health care, health insurance and the role of supply factors," Social Science & Medicine, Elsevier, vol. 213(C), pages 134-145.
    15. Matias Busso & Patrick Kline, 2008. "Do Local Economic Development Programs Work? Evidence from the Federal Empowerment Zone Program," Cowles Foundation Discussion Papers 1639, Cowles Foundation for Research in Economics, Yale University.
    16. Henry Renski, 2018. "Estimating the Returns to Professional Certifications and Licenses in the U.S. Manufacturing Sector," Economic Development Quarterly, , vol. 32(4), pages 341-356, November.
    17. Marco Caliendo & Frank M. Fossen & Alexander Kritikos & Miriam Wetter, 2015. "The Gender Gap in Entrepreneurship: Not just a Matter of Personality," CESifo Economic Studies, CESifo Group, vol. 61(1), pages 202-238.
    18. Alison L. Booth, 2006. "The Glass Ceiling in Europe: Why Are Women Doing Badly in the Labour Market?," CEPR Discussion Papers 542, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    19. Valentine Fays & Benoît Mahy & François Rycx, 2023. "Wage differences according to workers' origin: The role of working more upstream in GVCs," LABOUR, CEIS, vol. 37(2), pages 319-342, June.
    20. Michael E. Martell & Peyton Nash, 2020. "For Love and Money? Earnings and Marriage Among Same-Sex Couples," Journal of Labor Research, Springer, vol. 41(3), pages 260-294, September.

    More about this item

    Keywords

    Labor and Human Capital; Food Security and Poverty;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:pugtwp:331318. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/gtpurus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.