Trade Liberalization in Peru: Adjustment Costs Amidst High Labor Mobility

27 Pages Posted: 25 Apr 2017

See all articles by Elin Baldárrago

Elin Baldárrago

Universidad Católica San Pablo

Gonzalo Salinas

International Monetary Fund (IMF)

Date Written: March 2017

Abstract

While trade integration has been an engine of global growth and prosperity some sectors have been negatively affected by increased imports competition, as expected in theory. Higher labor mobility could lower these adjustment costs. This paper measures the cost of trade integration in a context of high internal migration. Specifically, we focus on the 2004- 14 period of trade liberalization in Peru (a major beneficiary of trade integration). Despite significant migration in response to lower tariffs, we find a significant negative relation between tariff reduction and socioeconomic indicators of imports-competing districts. This underscores the need for policy action to support the 'losers from trade liberalization'.

Keywords: Trade liberalization, Peru, Poverty, Tariff, Measurement and Analysis of Poverty, Regional, Urban, and Rural Analyses, General

JEL Classification: F13, I32, O18, O19, O20, O24

Suggested Citation

Baldárrago, Elin and Salinas, Gonzalo E., Trade Liberalization in Peru: Adjustment Costs Amidst High Labor Mobility (March 2017). Available at SSRN: https://ssrn.com/abstract=2958200 or http://dx.doi.org/10.2139/ssrn.2958200

Elin Baldárrago (Contact Author)

Universidad Católica San Pablo

Urb. Campiña Paisajista s/n - Quinta Vivanco
Arequipa, Arequipa
Peru

Gonzalo E. Salinas

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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