Trade Liberalization and Labor Market Adjustment in Brazil

46 Pages Posted: 20 Apr 2016  

Nina Pavcnik

Dartmouth College - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Andreas Blom

World Bank

Pinelopi Goldberg

Yale University - Department of Economics; National Bureau of Economic Research (NBER); Yale University - Cowles Foundation

Norbert Schady

World Bank - Development Research Group

Date Written: October 2002

Abstract

The authors study the impact of the 1988-94 trade liberalization in Brazil on wage distribution. They explore three main channels through which trade liberalization could have affected wage distribution: (1) increasing returns to skilled workers because of Hecksher-Ohlin adjustments to trade policy; (2) trade-induced skill-biased technological change; and (3) changes in industry wage premiums. The results suggest that trade reform in Brazil did contribute to the growing skill premium through skill-biased technological change, which was partially instigated by increased foreign competition. The authors also find that sector-specific returns to skill increased more in sectors with bigger tariff reductions. But they find little support for Hecksher-Ohlin type adjustments to trade reform. Overall, the effects of trade reform on wage inequality seem relatively small.

This paper - a product of the Poverty Sector Unit, Latin America and the Caribbean Region - is part of a larger effort in the region to understand the effects of globalization on inequality in developing countries.

Suggested Citation

Pavcnik, Nina and Blom, Andreas and Goldberg, Pinelopi and Schady, Norbert, Trade Liberalization and Labor Market Adjustment in Brazil (October 2002). World Bank Policy Research Working Paper No. 2982. Available at SSRN: https://ssrn.com/abstract=636344

Nina Pavcnik (Contact Author)

Dartmouth College - Department of Economics ( email )

6106 Rockefeller Hall
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Centre for Economic Policy Research (CEPR)

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National Bureau of Economic Research (NBER)

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Andreas Blom

World Bank ( email )

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Pinelopi (Penny) Goldberg

Yale University - Department of Economics ( email )

P.O. Box 208268
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New Haven, CT 06520-8268
United States
203-432-3569 (Phone)
203-432-6323 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
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Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Norbert Schady

World Bank - Development Research Group ( email )

1818 H Street NW
Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/nschady

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