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Trade liberalization and labor market adjustment in Brazil, Volume 1
Author:Pavcnik, Nina; Blom, Andreas; Goldberg, Pinelopi; Schady, Norbert; Country:Brazil;
Date Stored:2003/04/04Document Date:2003/03/31
Document Type:Policy Research Working PaperSubTopics:Municipal Financial Management; Water and Industry; Public Health Promotion; Free Trade; Environmental Economics & Policies; Health Monitoring & Evaluation
Language:EnglishRegion:Latin America & Caribbean
Report Number:WPS2982Sub Sectors:General industry and trade sector
Collection Title:Policy, Research working paper series ; no. WPS 2982Volume No:1

Summary: 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.

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