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Trade Liberalization in Peru: Adjustment Costs Amidst High Labor Mobility

Author

Listed:
  • Elin Baldárrago
  • Mr. Gonzalo Salinas

Abstract

While trade integration has been an engine of global growth and prosperity, as suggested by theory, some sectors have been negatively affected by increased import competition. We test if this negative effect is significant in a context of high intranational migration, as theory indicates that labor mobility could reduce it. We focus on the 2004-14 period of trade liberalization in Peru (a major beneficiary of trade integration), which allows for methodological improvements relative to similar studies. We find that districts competing with liberalized imports experienced significantly lower growth in consumption per capita despite some emigration in response to increased import competition. This underscores the need to support the “losers of trade liberalization” even amidst high labor mobility.

Suggested Citation

  • Elin Baldárrago & Mr. Gonzalo Salinas, 2017. "Trade Liberalization in Peru: Adjustment Costs Amidst High Labor Mobility," IMF Working Papers 2017/047, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2017/047
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    Cited by:

    1. Ms. Kimberly Beaton & Ms. Valerie Cerra & Metodij Hadzi-Vaskov, 2021. "Trade, Jobs, and Inequality," IMF Working Papers 2021/178, International Monetary Fund.
    2. International Monetary Fund, 2017. "Cluster Report: Trade Integration in Latin America and the Caribbean," IMF Staff Country Reports 2017/066, International Monetary Fund.

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