Trade Liberalization, Employment Flows, and Wage Inequality in Brazil
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.
Summary: | 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. |
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