Labor Reallocation in Response to Trade Reform

By N. Menezes-Filho, Marc-Andreas Muendler. Social Science Research Network, 2011

342 citations recorded by the source corpus.

Tracking individual workers across jobs after Brazil's trade liberalization in the 1990s shows that tariff cuts trigger worker displacements, but neither exporters nor comparative-advantage sectors absorb trade-displaced labor. On the contrary, exporters separate from significantly more and hire fewer workers than the average employer. Trade liberalization increases transitions to services, unemployment, and out of the labor force. Results are consistent with faster labor productivity growth than sales expansions so that output shifts to more productive firms while labor does not. Higher rates of failed reallocations and longer durations of complete reallocations result, associated with a costly incidence of idle resources.

View Paper: https://www.semanticscholar.org/paper/40b5907f43f12f6ed283bb04915da5cb0b8fb593

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Citations in the corpus

Export Markets and Labor Allocation in a Low-Income Country (2018, unknown): “…complement the existing literature on labor reallocations among larger firms in response to trade based on conventional firm-level or matched employee-employer data sets covering the manufacturing sector (Levinsohn (1999), Menezes-Filho and Muendler (2011), Krishna, Poole, and Senses (2012)).”
The Impact of Trade on Inequality in Developing Countries (2017, unknown): “…developed countries, including Brazil, the United States and Canada, find support for larger employment declines in less productive firms in response to increased import competition or bilateral trade liberalization (Menezes-Filho and Muendler 2011; Bernard, Jensen and Schott 2006; Trefler 2004).”
Trade Liberalization and Poverty: What Have We Learned in a Decade? (2014, background): “Similarly, Menezes-Filho & Muendler (2011) find that lower product tariffs increased the probability of being forced out of the formal sector and into unemployment, but these authors find no evidence of increased transition into the informal sector.”
Trade liberalization and unemployment: Theory and evidence from India (2012, unknown): “The key empirical studies that analyze the links between trade policy and unemployment for individual developing countries are Attanasio, Goldberg, and Pavcnik (2004), Menezes-Filho and Muendler (2007), and Porto (2008).”
Estimating the Impact of Trade and Offshoring on American Workers using the Current Population Surveys (2011, unknown): “Menezes-Filho and Muendler (2011) use a Brazilian trade reform to document significant short-run costs to workers and sticky intersectoral labor reallocation.”