Labor Demand and Trade Reform in Latin America

There are concerns that trade reform and globalization will increase the uncertainty that the average worker, especially the relatively unskilled worker, faces. The increased competitiveness of product markets and greater access to foreign inputs, the argument goes, will lead to more elastic demand for workers. This may have adverse consequences for both labor market volatility and wage dispersion. The authors argue that while the case that trade liberalization should increase own-wage elasticities may be broadly compelling for competitive import-competing industries, it is less so for imperfectly competitive, nontradable, or export industries. They test the hypothesis using establishment-level panel data from three countries with periods of liberalization. The data provide only mixed support for the idea that trade liberalization has an impact on own-wage elasticities. No consistent patterns emerge. If globalization is making the lives of workers more insecure, it is probably working through some other mechanism.

Bibliographic Details

Main Authors:	Fajnzylber, Pablo, Maloney, William F.
Format:	Policy Research Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2000-11
Subjects:	ABSOLUTE VALUE, ADJUSTMENT PERIOD, ADJUSTMENT PROCESS, AVERAGE TARIFFS, BALANCE OF PAYMENTS, CAPITAL GOODS, CAPITAL INPUTS, CARTEL, CHANGES IN TRADE, COLLUSION, COMPETITIVE MARKET, COMPETITIVENESS, CONSTANT RETURNS, CONSTANT RETURNS TO SCALE, COST FUNCTIONS, CURRENCY, DATA SET, DATA SETS, DEMAND CURVE, DEMAND CURVES, DEMAND ELASTICITIES, DEMAND ELASTICITY, DEPENDENT VARIABLE, DEVELOPING COUNTRIES, DEVELOPING WORLD, DEVELOPMENT ECONOMICS, DOMESTIC INDUSTRY, DOMESTIC MARKET, DUMPING, DUOPOLY, DYNAMIC PANEL, ECONOMETRICS, ECONOMIC REVIEW, ECONOMIC STUDIES, ECONOMIES OF SCALE, ELASTICITIES, ELASTICITY, ELASTICITY OF DEMAND, ELASTICITY OF SUBSTITUTION, EMPIRICAL EVIDENCE, EMPIRICAL LITERATURE, EMPIRICAL STUDIES, EMPLOYMENT, ENDOGENOUS VARIABLES, EQUILIBRIUM, EXCHANGE RATE, EXCHANGE RATE MOVEMENTS, EXPENDITURES, EXPLANATORY VARIABLES, EXPORT INDUSTRIES, EXPORTS, FACTOR DEMAND, FACTOR PRICES, FOREIGN INVESTMENT, FUNCTIONAL FORM, GDP, HETEROSKEDASTICITY, HUMAN CAPITAL, IMPACT OF TRADE, IMPACT OF TRADE LIBERALIZATION, IMPERFECT COMPETITION, IMPORT PENETRATION, IMPORT TARIFFS, IMPORTS, INCOMES, INCREASING RETURNS, INCREASING RETURNS TO SCALE, INDUSTRIAL SECTOR, INTERMEDIATE INPUTS, INTERNATIONAL TRADE, LABOR COSTS, LABOR DEMAND, LABOR DEMAND FUNCTIONS, LABOR MARKET, LABOR MARKET VOLATILITY, LABOR MARKETS, LAGGED DEPENDENT, LDCS, LIBERALIZATION OF TRADE, MARGINAL COST, MARGINAL COSTS, MARGINAL REVENUE, MARKET BEHAVIOR, MARKET POWER, MARKET RISK, MARKET STRUCTURE, MONOPOLY RENTS, NEGATIVE CORRELATION, NEGATIVE IMPACT, OLIGOPOLY, OPEN TRADE REGIME, OUTPUT ELASTICITY, POLICY CHANGE, POLICY RESEARCH, POLICY VARIABLES, POLITICAL ECONOMY, POVERTY REDUCTION, PROCESS OF LIBERALIZATION, PRODUCERS, PRODUCT MARKETS, PRODUCTION TECHNOLOGY, PRODUCTIVITY, PROFIT MARGINS, PROPORTIONAL CHANGE, PROTECTIONISM, QUOTAS, RANDOM EFFECTS, RANDOM WALK, REAL EXCHANGE RATE, REAL EXCHANGE RATES, RELATIVE PRICES, RELATIVE WAGES, RETURNS TO SCALE, REVENUE CURVE, SCALE EFFECT, SERIAL CORRELATION, SPECIALIZATION, STOCKS, SUBSTITUTION ELASTICITIES, SUPPLY CURVE, SUPPLY CURVES, TARIFF BARRIERS, TARIFF PROTECTION, TARIFF RATE, TARIFF REDUCTIONS, TECHNOLOGICAL CHANGE, TOTAL COSTS, TRADE BARRIERS, TRADE DATA, TRADE DEFICIT, TRADE FLOWS, TRADE INTEGRATION, TRADE LIBERALIZATION, TRADE OPENNESS, TRADE POLICY, TRADE REFORM, TRADE REFORMS, TRADE REGIMES, TURNOVER, UNEMPLOYMENT, UNSKILLED LABOR, UNSKILLED WORKERS, VALUE ADDED, VOLUNTARY EXPORT RESTRAINTS, WAGE CHANGES, WAGE INEQUALITY,
Online Access:	http://documents.worldbank.org/curated/en/2000/11/729383/labor-demand-trade-reform-latin-america http://hdl.handle.net/10986/19777
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