Trade Liberalization in Peru: Adjustment Costs Amidst High Labor Mobility
27 Pages Posted: 25 Apr 2017
Date Written: March 2017
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
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