Trade Liberalization, Employment Flows, and Wage Inequality in Brazil
56 Pages Posted: 20 Apr 2016
Date Written: January 1, 2007
Using nationally representative, economywide data, this paper investigates the relative importance of trade-mandated effects on industry wage premia; industry and economywide skill premia; and employment flows in accounting for changes in the wage distribution in Brazil during the 1988-95 trade liberalization. Unlike in other Latin American countries, trade liberalization appears to have made a significant contribution toward a reduction in wage inequality. These effects have not occurred through changes in industry-specific (wage or skill) premia. Instead, they appear to have been channeled through substantial employment flows across sectors and formality categories. Changes in the economywide skill premium are also important.
Keywords: Economic Theory & Research, Free Trade, Labor Markets, Trade Policy, Trade Law
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