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Trade Reform and Regional Dynamics: Evidence From 25 Years of Brazilian Matched Employer-Employee Data

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dc.contributor.authorDix-Carneiro, Rafael
dc.contributor.authorKovak, Brian K.
dc.date.accessioned2015-03-30T19:45:23Z
dc.date.available2015-03-30T19:45:23Z
dc.date.issued2015-03
dc.description.abstractThis paper empirically studies the dynamics of labor market adjustment following the Brazilian trade reform of the 1990s. The paper uses variation in industry-specific tariff cuts interacted with initial regional industry mix to measure trade-induced local labor demand shocks and examines regional and individual labor market responses to those one-time shocks over two decades. Contrary to conventional wisdom, the analysis does not find that the impact of local shocks is dissipated over time through wage-equalizing migration. Instead, it finds steadily growing effects of local shocks on regional formal sector wages and employment for 20 years. This finding can be rationalized in a simple equilibrium model with two complementary factors of production, labor and industry-specific factors such as capital, that adjust slowly and imperfectly to shocks. Next, the paper documents rich margins of adjustment induced by the trade reform at the regional and individual levels. Workers initially employed in harder hit regions face continuously deteriorating formal labor market outcomes relative to workers employed in less affected regions, and this gap persists even 20 years after the beginning of trade liberalization. Negative local trade shocks induce workers to shift out of the formal tradable sector and into the formal nontradable sector. Non-employment strongly increases in harder hit regions in the medium run, but in the longer run, non-employed workers eventually find re-employment in the informal sector. Working age population does not react to these local shocks, but formal sector net migration does, consistent with the relative decline of the formal sector and growth of the informal sector in adversely affected regions.en
dc.identifier.doi10.1596/1813-9450-7205
dc.identifier.urihttps://hdl.handle.net/10986/21644
dc.language.isoen_US
dc.publisherWorld Bank Group, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 7205
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.subjecttrade liberalization
dc.subjecttransitional dynamics
dc.subjectindustry wages
dc.subjectjobs
dc.subjectemployment
dc.subjecthousehold survey
dc.subjectemployment rate
dc.subjectrights
dc.subjectexport markets
dc.subjectaccounting
dc.subjectwage gap
dc.subjectproduction
dc.subjectearnings regressions
dc.subjectskilled workers
dc.subjectemployment share
dc.subjectinformal sector
dc.subjectminimum wage
dc.subjectincome
dc.subjectprotected industry
dc.subjectperfect competition
dc.subjectlabor allocation
dc.subjectexchange
dc.subjectinformation
dc.subjectlabor force
dc.subjectpolitical economy
dc.subjectjob
dc.subjecteffects
dc.subjectincentives
dc.subjectlabor economics
dc.subjecttrade reforms
dc.subjectlabor statistics
dc.subjectfactors of production
dc.subjectretail trade
dc.subjectlabor market policies
dc.subjectfree trade
dc.subjectwage growth
dc.subjectdeveloping country
dc.subjectdomestic workers
dc.subjectlabor market
dc.subjecttraining
dc.subjectdevelopment economics
dc.subjectunemployed workers
dc.subjectindustry wage
dc.subjectworker
dc.subjectoutputs
dc.subjectjob information
dc.subjectproductivity
dc.subjectunemployed
dc.subjectattrition
dc.subjectprogram consisting
dc.subjectadjustment process
dc.subjectfinancial institutions
dc.subjectformal labor market
dc.subjectjob market
dc.subjectmarkets
dc.subjectorganizations
dc.subjecthousehold surveys
dc.subjectopen economy
dc.subjectunemployment insurance
dc.subjectlabor
dc.subjectearnings growth
dc.subjectliberalization
dc.subjectminimum wages
dc.subjectunemployment
dc.subjectskill premium
dc.subjectfactor markets
dc.subjecthuman capital
dc.subjectformal sector workers
dc.subjectprevious work
dc.subjectworkers
dc.subjectjob destruction rates
dc.subjectdisplaced workers
dc.subjectwages
dc.subjectpolicies
dc.subjectinformal labor markets
dc.subjectinternational trade
dc.subjectbarriers
dc.subjectlocal labor markets
dc.subjectreal wage
dc.subjectlabor demand
dc.subjectvalue
dc.subjectcross-sectional data
dc.subjectplant size
dc.subjectpaying job
dc.subjectlabor studies
dc.subjectwage premium
dc.subjectlabor adjustment
dc.subjectoccupation
dc.subjectprivate services
dc.subjectincome distribution
dc.subjectemployment status
dc.subjectearnings regression
dc.subjectlabor market outcomes
dc.subjectemployment growth
dc.subjectjob creation
dc.subjectlabor mobility
dc.subjecthigh wage
dc.subjectformal sector wages
dc.subjecteconomic theory
dc.subjecttrade liberalization
dc.subjectworker heterogeneity
dc.subjecteconomics
dc.subjectleather industries
dc.subjectinsurance
dc.subjectwage structure
dc.subjectmanufacturing industries
dc.subjecttrade
dc.subjectjob destruction
dc.subjectpension account
dc.subjecttheory
dc.subjectworking conditions
dc.subjectinvestment
dc.subjectcontracting
dc.subjectlabor market regulations
dc.subjectlaborers
dc.subjectsupply
dc.subjectforeign workers
dc.subjectemployee
dc.subjectemployment dynamics
dc.subjectlabor supply
dc.subjectlabor market adjustment
dc.subjectconsumer price index
dc.subjectworld trade
dc.subjectinformal employment
dc.subjectlocal labor market
dc.subjectunskilled workers
dc.subjectarbitrage
dc.subjectlabour
dc.subjectcapital investment
dc.subjectlabor markets
dc.subjecteconomic shocks
dc.subjectoutcomes
dc.subjectprices
dc.subjectlabor regulations
dc.subjectlabor reallocation
dc.subjectemployees
dc.titleTrade Reform and Regional Dynamicsen
dc.title.subtitleEvidence From 25 Years of Brazilian Matched Employer-Employee Dataen
dc.typeWorking Paperen
dc.typeDocument de travailfr
dc.typeDocumento de trabajoes
dspace.entity.typePublication
okr.crosscuttingsolutionareaJobs
okr.crossref.titleTrade Reform and Regional Dynamics: Evidence from 25 Years of Brazilian Matched Employer-Employee Data
okr.date.disclosure2015-03-02
okr.date.doiregistration2025-04-10T10:55:13.049224Z
okr.doctypePublications & Research
okr.doctypePublications & Research::Policy Research Working Paper
okr.globalpracticeTrade and Competitiveness
okr.guid358911468183848548
okr.identifier.doi10.1596/1813-9450-7205
okr.identifier.reportWPS7205
okr.language.supporteden
okr.region.administrativeLatin America and Caribbean
okr.region.countryBrazil
okr.topicMacroeconomics and Economic Growth::Economic Growth
okr.topicMacroeconomics and Economic Growth::Economic Theory & Research
okr.topicMacroeconomics and Economic Growth::Regional Economic Development
okr.topicPrivate Sector Development::Emerging Markets
okr.topicSocial Protections and Labor::Labor Markets
okr.topicSocial Protections and Labor::Labor Policies
okr.unitOffice of the Chief Econmist, Latin America and the Caribbean Region (LCRCE)
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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