The Impact of Trade Liberalization on Employment, Capital, and Productivity Dynamics: Evidence from the Uruguayan Manufacturing Sector

Journal of Policy Reform, Volume 7, Issue 4, pages 225-248, December 2004

IDB Working Paper No. 184

42 Pages Posted: 19 Apr 2011 Last revised: 23 Jul 2013

See all articles by Carlos Casacuberta

Carlos Casacuberta

Universidad ORT at Uruguay - Department of Economics

Gabriela Fachola

Universidad ORT at Uruguay

Nestor Gandelman

Universidad ORT Uruguay

Date Written: April 1, 2004

Abstract

This paper studies the impact of trade liberalization on labor and capital gross flows and productivity in the Uruguayan manufacturing sector. Uruguay opened its economy in the presence of -at least initially- strong unions and structurally different industry concentration levels. Higher international exposure implied slightly higher job creation and an important increase in job and capital destruction. Unions were able to dampen this effect. Although not associated with higher creation rates, unions were effective in reducing job and capital destruction. Industry concentration also was found to mitigate the destruction of jobs but had no effect on job creation or capital dynamics. The changes in the use of labor and capital were accompanied by an increase in total factor productivity, especially in sectors where tariff reductions were larger and unions were not present. The authors found no evidence of varying productivity dynamics across different industry concentration levels.

Suggested Citation

Casacuberta, Carlos and Fachola, Gabriela and Gandelman, Nestor, The Impact of Trade Liberalization on Employment, Capital, and Productivity Dynamics: Evidence from the Uruguayan Manufacturing Sector (April 1, 2004). Journal of Policy Reform, Volume 7, Issue 4, pages 225-248, December 2004, IDB Working Paper No. 184, Available at SSRN: https://ssrn.com/abstract=1814735

Carlos Casacuberta (Contact Author)

Universidad ORT at Uruguay - Department of Economics ( email )

Bulevar Espana 2633
Montevideo, 11300
Uruguay

Gabriela Fachola

Universidad ORT at Uruguay ( email )

Bvar. Espana 2633
Montevideo

Nestor Gandelman

Universidad ORT Uruguay ( email )

Bulevar España 2633
Montevideo, 11.300
Uruguay

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