Regional Effects of Trade Reform: What Is the Correct Measure of Liberalization?
- (pp. 1960-76)
AbstractA growing body of research examines the regional effects of trade liberalization using a weighted average of trade policy changes across industries. This paper develops a specific-factors model of regional economies that provides a theoretical foundation for this intuitively appealing empirical approach and also provides guidance on treatment of the nontraded sector. In the context of Brazil's early 1990s trade liberalization, I find that regions facing a 10 percentage point larger liberalization-induced price decline experienced a 4 percentage point larger wage decline. The results also confirm the empirical relevance of appropriately dealing with the nontraded sector.
CitationKovak, Brian K. 2013. "Regional Effects of Trade Reform: What Is the Correct Measure of Liberalization?" American Economic Review, 103 (5): 1960-76. DOI: 10.1257/aer.103.5.1960
- F13 Trade Policy; International Trade Organizations
- F16 Trade and Labor Market Interactions
- O19 International Linkages to Development; Role of International Organizations
- O24 Development Planning and Policy: Trade Policy; Factor Movement; Foreign Exchange Policy