IDEAS home Printed from https://ideas.repec.org/p/wpa/wuwpit/0512017.html
   My bibliography  Save this paper

Trade, Poverty and Employment: The Social Consequences of Integration with China

Author

Listed:
  • Lucio Castro

    (Maxwell Stamp PLC)

  • Daniel Saslavsky

    (Inter American Development Bank)

Abstract

This paper estimates the potential effects of a free trade agreement (FTA) between China and Mercosur on poverty, income distribution, welfare and employment. The case of Argentina, in particular, is investigated. To this end, partial equilibrium techniques are combined with micro econometric methodologies employing data from household surveys to examine the likely effects of an FTA with China on poverty and income distribution. We find that the FTA would result in a small reduction in poverty as well as an improvement in the income distribution. Highly disaggregated data at the industry level is used for the first time to estimate labor demand-output and wage elasticities in order to estimate the effects of an agreement with China on sectoral and aggregate employment rates. According to this, trade with the PRC did not have a significant effect on industrial employment, even in a period of swift trade liberalization like the nineties.

Suggested Citation

  • Lucio Castro & Daniel Saslavsky, 2005. "Trade, Poverty and Employment: The Social Consequences of Integration with China," International Trade 0512017, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpit:0512017
    Note: Type of Document - pdf; pages: 29
    as

    Download full text from publisher

    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/it/papers/0512/0512017.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. James J. Heckman & Carmen Pagés, 2004. "Law and Employment: Lessons from Latin America and the Caribbean," NBER Books, National Bureau of Economic Research, Inc, number heck04-1.
    2. Feenstra, Robert C., 1989. "Symmetric pass-through of tariffs and exchange rates under imperfect competition: An empirical test," Journal of International Economics, Elsevier, vol. 27(1-2), pages 25-45, August.
    3. Bernard, Andrew B. & Jensen, J. Bradford & Schott, Peter K., 2006. "Survival of the best fit: Exposure to low-wage countries and the (uneven) growth of U.S. manufacturing plants," Journal of International Economics, Elsevier, vol. 68(1), pages 219-237, January.
    4. Porto, Guido G., 2003. "Trade reforms, market access, and poverty in Argentina," Policy Research Working Paper Series 3135, The World Bank.
    5. Márquez, Gustavo & Gasparini, Leonardo & Salas, Carlos & Herrera, Beethoven & Kuhn, Peter & Silva, Ilmar Ferreira & Marques, Lílian Arruda & Ribeiro, Luis & Francio, Ricardo & Sanches, Solange & André, 2005. "¿Para bien o para mal?: Debate sobre el impacto de la globalización en los mercados de trabajo de América Latina," IDB Publications (Books), Inter-American Development Bank, number 326, November.
    6. Revenga, Ana, 1997. "Employment and Wage Effects of Trade Liberalization: The Case of Mexican Manufacturing," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 20-43, July.
    7. Ravallion, M., 1992. "Poverty Comparisons - A Guide to Concepts and Methods," Papers 88, World Bank - Living Standards Measurement.
    8. Nicita, Alessandro, 2004. "Who benefited from trade liberalization in Mexico? Measuring the effects on household welfare," Policy Research Working Paper Series 3265, The World Bank.
    9. Pablo Acosta & Leonardo Gasparini, 2007. "Capital Accumulation, Trade Liberalization, and Rising Wage Inequality: The Case of Argentina," Economic Development and Cultural Change, University of Chicago Press, vol. 55(4), pages 793-812, July.
    10. Altimir, Oscar & Beccaría, Luis Alberto, 1999. "El mercado de trabajo bajo el nuevo régimen económico en Argentina," Series Históricas 7476, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    11. Haltiwanger, John & Kugler, Adriana & Kugler, Maurice & Micco, Alejandro & Pagés, Carmen, 2004. "Effects of tariffs and real exchange rates on job reallocation: evidence from Latin America," Discussion Paper Series In Economics And Econometrics 0410, Economics Division, School of Social Sciences, University of Southampton.
    12. Porto, Guido G., 2006. "Using survey data to assess the distributional effects of trade policy," Journal of International Economics, Elsevier, vol. 70(1), pages 140-160, September.
    13. Daniel S. Hamermesh, 2004. "Labor Demand in Latin America and the Caribbean. What Does It Tell Us?," NBER Chapters, in: Law and Employment: Lessons from Latin America and the Caribbean, pages 553-562, National Bureau of Economic Research, Inc.
    14. John Haltiwanger & Adriana Kugler & Maurice Kugler & Alejandro Micco & Carmen Pages, 2004. "Effects of tariffs and real exchange rates on job reallocation: evidence from Latin America," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 7(4), pages 191-208.
    15. André Sapir & Mathias Dewatripont & Khalid Sekkat, 1999. "Trade and jobs in Europe: much ado about nothing?," ULB Institutional Repository 2013/8076, ULB -- Universite Libre de Bruxelles.
    16. Dewatripont, Mathias & Sapir, Andre & Sekkat, Khalid (ed.), 1999. "Trade and Jobs in Europe: Much Ado About Nothing?," OUP Catalogue, Oxford University Press, number 9780198293606.
    17. John Haltiwanger & Adriana Kugler & Maurice Kugler & Alejandro Micco & Carmen Pages, 2004. "Effects of tariffs and real exchange rates on job reallocation: evidence from Latin America," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 7(4), pages 191-208.
    18. Lori G. Kletzer, 2001. "Job Loss from Imports: Measuring the Costs," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 110, April.
    Full references (including those not matched with items on IDEAS)

    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. Castro, Lucio & Olarreaga, Marcelo & Saslavsky, Daniel, 2006. "The impact of trade with China and India on Argentina’s manufacturing employment," MPRA Paper 538, University Library of Munich, Germany.
    2. Lucio Castro & Daniel Saslavsky, 2008. "Trade with China and India and Manufacturing Labour Demand in Argentina," WIDER Working Paper Series RP2008-108, World Institute for Development Economic Research (UNU-WIDER).
    3. Hoekman & Bernard & Winters, L. Alan, 2005. "Trade and employment : stylized facts and research findings," Policy Research Working Paper Series 3676, The World Bank.
    4. Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "Distributional Effects of Globalization in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 45(1), pages 39-82, March.
    5. Calderón, César & Casacuberta, Carlos & Castro, Lucio & Cravino, Javier & Feenstra, Robert C. & Freund, Caroline & Gandelman, Néstor & Hanson, Gordon H. & Kee, Hiau Looi & Lederman, Daniel & Olarreaga, 2009. "China's and India's Challenge to Latin America: Opportunity or Threat?," IDB Publications (Books), Inter-American Development Bank, number 357, November.
    6. Daniel Lederman & Marcelo Olarreaga & Guillermo E. Perry, 2009. "China's and India's Challenge to Latin America : Opportunity or Threat?," World Bank Publications - Books, The World Bank Group, number 2591.
    7. Daniel Lederman & Marcelo Olarreaga & Guillermo E. Perry, 2009. "China's and India's Challenge to Latin America : Opportunity or Threat?," World Bank Publications, The World Bank, number 2591, September.
    8. Novella Bottini & Michael Gasiorek, 2009. "Trade and Job Reallocation: Evidence for Morocco," LIUC Papers in Economics 224, Cattaneo University (LIUC).
    9. Brian, McCaig, 2011. "Exporting out of poverty: Provincial poverty in Vietnam and U.S. market access," Journal of International Economics, Elsevier, vol. 85(1), pages 102-113, September.
    10. A. Kerem Co?ar & Nezih Guner & James Tybout, 2016. "Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy," American Economic Review, American Economic Association, vol. 106(3), pages 625-663, March.
    11. Marc-Andreas Muendler, 2008. "Trade and Workforce Changeover in Brazil," NBER Chapters, in: The Analysis of Firms and Employees: Quantitative and Qualitative Approaches, pages 269-308, National Bureau of Economic Research, Inc.
    12. Muendler, Marc-Andreas, 2007. "Labor Reallocation in Response to Trade Reform," University of California at San Diego, Economics Working Paper Series qt3cm38535, Department of Economics, UC San Diego.
    13. Gallego, Francisco A. & Tessada, José A., 2012. "Sudden stops, financial frictions, and labor market flows: Evidence from Latin America," Journal of Development Economics, Elsevier, vol. 97(2), pages 257-268.
    14. Alessandro Ruggieri, 2019. "Trade and labour market institutions: A tale of two liberalizations," Discussion Papers 2019-15, University of Nottingham, GEP.
    15. Halit Yanikkaya, 2013. "Is trade liberalization a solution to the unemployment problem?," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 12(1), pages 57-85, April.
    16. Paolo Giordano & Kun Li, 2012. "An Updated Assessment of the Trade and Poverty Nexus in Latin America," IDB Publications (Working Papers) 79119, Inter-American Development Bank.
    17. Pablo Egaña & Alejandro Micco, 2011. "Labor Market in Latin America and the Caribbean: The Missing Reform," Working Papers wp345, University of Chile, Department of Economics.
    18. Felbermayr, Gabriel & Jung, Benjamin, 2012. "The home market effect, regional inequality, and intra-industry reallocations," University of Tübingen Working Papers in Business and Economics 33, University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics.
    19. Yoshimichi Murakami, 2021. "Trade liberalization and wage inequality: Evidence from Chile," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 30(3), pages 407-438, April.
    20. Galindo, Arturo & Izquierdo, Alejandro & Montero, Jose Manuel, 2007. "Real exchange rates, dollarization and industrial employment in Latin America," Emerging Markets Review, Elsevier, vol. 8(4), pages 284-298, December.

    More about this item

    Keywords

    China; Import Competition; Trade and Labor Market Interactions; Employment; Income Distribution; Poverty;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:wpa:wuwpit:0512017. 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: EconWPA (email available below). General contact details of provider: https://econwpa.ub.uni-muenchen.de .

    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.