The Effects of Trade Liberalization on Growth, Employment, and Wages

Eduardo Lora

in The Oxford Handbook of Latin American Economics

Published in print July 2011 | ISBN: 9780199571048
Published online September 2012 | | DOI:

Series: Oxford Handbooks in Economics

 The Effects of Trade Liberalization on Growth, Employment, and Wages

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This chapter examines the effects on growth, employment, and wages of the trade-liberalization policies pursued in Latin America between the late 1980s and the late 1990s, starting with a short description of trade-liberalization measures, followed by a discussion of their expected results, both by the reformers and their opponents. The two central sections of the chapter present a survey of the empirical literature that has assessed the effects of trade liberalization on growth and employment, with an emphasis on Latin America. The chapter holds the following: trade liberalization did increase productivity and economic growth, but modestly and perhaps temporarily; while trade liberalization did increase productivity, it did not have the expected effect on wages, which fell in the sectors most subject to competition; trade liberalization may have contributed to widening wage gaps, although to a lesser extent than is generally believed.

Keywords: trade-liberalization policies; Latin America; economic growth; wage gaps

Article.  11083 words. 

Subjects: Economics ; International Economics ; Public Economics

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