The%20Impact%20of%20Trade%20Liberalization%20on%20Employment%2C%20Capital%2C%20and%20Productivity%20Dynamics%3A%20Evidence%20from%20the%20Uruguayan%20Manufacturing%20Sector

Working Papers (Research Network)

The Impact of Trade Liberalization on Employment, Capital, and Productivity Dynamics: Evidence from the Uruguayan Manufacturing Sector


CODE: R-479
AUTHOR(s): Casacuberta, Carlos , Fachola, Gabriela , Gandelman, Nestor
PUBLISHED: April 2004
LANGUAGE: English
RELATED TOPICS: Poverty Reduction and Labor
DOWNLOAD FILE IN: English

Abstract:

This paper studies the impact of trade liberalization on labor and capital gross flows and productivity in the Uruguayan manufacturing sector. Uruguay opened its economy in the presence of -at least initially- strong unions and structurally different industry concentration levels. Higher international exposure implied slightly higher job creation and an important increase in job and capital destruction. Unions were able to dampen this effect. Although not associated with higher creation rates, unions were effective in reducing job and capital destruction. Industry concentration also was found to mitigate the destruction of jobs but had no effect on job creation or capital dynamics. The changes in the use of labor and capital were accompanied by an increase in total factor productivity, especially in sectors where tariff reductions were larger and unions were not present. The authors found no evidence of varying productivity dynamics across different industry concentration levels.

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