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Trade and Workforce Changeover in Brazil

Trade and Workforce Changeover in Brazil

(p.269) 9 Trade and Workforce Changeover in Brazil
The Analysis of Firms and Employees
Marc-Andreas Muendler
University of Chicago Press

While the formation of multinational enterprises shapes much of the globalization debate over labor-market consequences in industrialized countries, an issue of foremost importance for developing countries is the impact of trade reform on the labor market. This chapter investigates changes in labor demand in Brazil following its large-scale trade liberalization in the early 1990s. Measures of labor-demand change document that the workforce in Brazil's traded goods sector simultaneously undergoes an occupation downgrading and an education upgrading. This workforce changeover is broadly consistent with Heckscher-Ohlin-style trade theory for a low-skill abundant economy, whose low-skill intensive activities are predicted to expand and absorb larger shares of skilled workers to maintain full employment. The worker reallocation pattern is not what classic trade theory implies: among the displaced workers with a successful reallocation, most shift to non-traded-output industries—but almost as many displaced workers do not find formal reemployment at an annual horizon.

Keywords:   Brazil, labor market, trade, skilled workers, displaced workers, worker reallocation, workforce changeover, reemployment, labor demand, traded goods sector

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