Working Paper: NBER ID: w20912
Authors: Rafael Dixcarneiro; Brian K. Kovak
Abstract: We develop a specific-factors model of regional economies that includes two types of workers, skilled and unskilled. The model delivers a simple equation relating trade-induced local shocks to changes in local skill premia. We apply the methodology to Brazil's early 1990s trade liberalization and find statistically significant but modest effects of liberalization on the evolution of the skill premium between 1991 and 2010. The methodology uses widely available household survey data and can easily be applied to other countries and liberalization episodes.
Keywords: Trade Liberalization; Skill Premium; Local Labor Markets
JEL Codes: F14; F16; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| trade liberalization (F13) | decline in skill premium (F66) |
| negative differential tariff shock (F69) | decline in skill premium (F66) |
| trade liberalization (F13) | changes in local skill premia (F66) |
| trade liberalization (F13) | regional skill premia (J31) |
| regional skill premia (J31) | observed decline in skill premium (F66) |