Effects of tariffs and real exchange rates on job reallocation: evidence from Latin America


Haltiwanger, John, Kugler, Adriana, Kugler, Maurice, Micco, Alejandro and Pagés, Carmen (2004) Effects of tariffs and real exchange rates on job reallocation: evidence from Latin America. Journal of Policy Reform, 7, (4), 189-208. (doi:10.1080/1384128042000285183).

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Description/Abstract

Openness to international competition can lead to enhanced resource allocation in the end. While factor reallocation is essential if net benefits are to be derived from trade liberalization, the process generates costs both for transitioning workers and for employers undergoing personnel turnover. Net welfare gains depend on adjustment costs. Understanding of these issues has been hampered by data limitations. In this paper, we overcome some of these limitations by using new, harmonized measures on job creation and destruction for a number of countries in Latin America. We use these new series to investigate the impact of the removal of protectionism on net employment and gross job reallocation in Latin America. We find a robust pattern showing that reductions in tariffs and exchange rate appreciations increase the pace of job reallocation within sectors. We also find, however, some evidence of declining net employment growth as trade exposure increases. For example, we find some evidence that in the wake of tariff reductions, there is lower net employment growth.

Item Type: Article
ISSNs: 1384-1289 (print)
Related URLs:
Keywords: tariff reduction, currency appreciation, trade exposure, intra-industry reallocation, F160, F310, O240
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
Divisions: University Structure - Pre August 2011 > School of Social Sciences > Economics
ePrint ID: 33852
Date Deposited: 16 May 2006
Last Modified: 27 Mar 2014 18:21
URI: http://eprints.soton.ac.uk/id/eprint/33852

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