Trade Liberalization and Intersectoral Labor Movements
Stanford GSB Working Paper No. 1652
59 Pages Posted: 24 Oct 2001
Date Written: October 2001
This paper examines the impact of trade liberalization episodes on movements of labor across sectors. The aim is to assess empirically whether increased trade openness leads to increased structural change, and if so to what extent. Results for a set of 25 liberalization episodes suggest weakly negative effects of liberalization on the extent of intersectoral labor shifts at the economy-wide 1-digit level of disaggregation. We do uncover increased sectoral change after liberalization at the 3-digit level within manufacturing, although the estimated effects are statistically weak and small in magnitude. The effects of liberalization on labor shifts differ across individual countries, in a way related to the scope and depth of reforms as well as the extent of job protection regulations.
Keywords: Trade liberalization, job reallocation
JEL Classification: F10, J21, O57
Suggested Citation: Suggested Citation