Effects of Tariffs and Real Exchange Rates on Job Reallocation: Evidence from Latin America

Journal of Policy Reform,7(4): 201-218, 2004

Posted: 7 Feb 2016

See all articles by John Haltiwanger

John Haltiwanger

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

Adriana D. Kugler

McCourt School of Public Policy ; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; National Bureau of Economic Research (NBER)

Maurice Kugler

United Nations Development Programme

Alejandro Micco

University of Chile

Carmen Pages

Inter-American Development Bank (IADB); IZA Institute of Labor Economics

Date Written: December 1, 2004

Abstract

Openness to international competition can lead to enhanced resource allocation in the end. While factor reallocation is essential if net benefits are to be derived from trade liberalization, the process generates costs both for transitioning workers and for employers undergoing personnel turnover. Net welfare gains depend on adjustment costs. Understanding of these issues has been hampered by data limitations. In this paper, we overcome some of these limitations by using new, harmonized measures on job creation and destruction for a number of countries in Latin America. We use these new series to investigate the impact of the removal of protectionism on net employment and gross job reallocation in Latin America. We find a robust pattern showing that reductions in tariffs and exchange rate appreciations increase the pace of job reallocation within sectors. We also find, however, some evidence of declining net employment growth as trade exposure increases. For example, we find some evidence that in the wake of tariff reductions, there is lower net employment growth.

Keywords: Tariff reduction, Currency appreciation, Trade exposure, Intra-industry reallocation

JEL Classification: F160, F310, O240

Suggested Citation

Haltiwanger, John C. and Kugler, Adriana Debora and Kugler, Maurice and Micco, Alejandro and Pages-Serra, Carmen, Effects of Tariffs and Real Exchange Rates on Job Reallocation: Evidence from Latin America (December 1, 2004). Journal of Policy Reform,7(4): 201-218, 2004 . Available at SSRN: https://ssrn.com/abstract=2727483

John C. Haltiwanger

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3504 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Adriana Debora Kugler (Contact Author)

McCourt School of Public Policy ( email )

3700 O ST NW
311 Old North
Washington, DC 20057
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Maurice Kugler

United Nations Development Programme ( email )

One United Nations Plaza
New York, NY 10017
United States

HOME PAGE: http://hdr.undp.org

Alejandro Micco

University of Chile ( email )

Pío Nono Nº1, Providencia
Santiago, R. Metropolitana 7520421
Chile

Carmen Pages-Serra

Inter-American Development Bank (IADB) ( email )

1300 New York Avenue, NW
Research Department
Washington, DC 20577
United States
202-623 3110 (Phone)
202-623-2481 (Fax)

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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