Chapter

Trade Liberalization, Employment Flows, and Wage Inequality in Brazil

Francisco H. G. Ferreira, Phillippe G. Leite and Matthew Wai‐Poi

in The Poor under Globalization in Asia, Latin America, and Africa

Published in print May 2010 | ISBN: 9780199584758
Published online September 2010 | e-ISBN: 9780191594533 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199584758.003.0008

Series: WIDER Studies in Development Economics

Trade Liberalization, Employment Flows, and Wage Inequality in Brazil

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Using nationally representative, economy‐wide data, this chapter investigates the relative importance of trade‐mandated effects on industry wage premiums; industry and economy‐wide skill premiums; 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 towards a reduction in wage inequality. These effects have not occurred through changes in industry‐specific (wage or skill) premiums. Instead, they appear to have been channelled through substantial employment flows across sectors and formality categories. Changes in the economy‐wide skill premium are also important.

Keywords: Brazil; employment flows; inequality; trade liberalization

Chapter.  19528 words.  Illustrated.

Subjects: Economic Development and Growth

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