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https://hdl.handle.net/2142/115583
Description
Title
Essays on labor economics and international trade
Author(s)
Squarize Chagas, Lucas
Issue Date
2022-04-21
Director of Research (if dissertation) or Advisor (if thesis)
Bernhardt, Mark D
Doctoral Committee Chair(s)
Bernhardt, Mark D
Committee Member(s)
Bartik, Alexander W
Perry, Martin
Lemus Encalada, Jorge
Department of Study
Economics
Discipline
Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Labor Markets, Internation Trade
Abstract
In the first paper, we study the effect of the bilateral trade integration with China on wage inequality in Brazil. Previous studies have documented the contribution of trade opening to the decline in inequality since the 1990s, driven primarily by cross-firm pay differences. Using more recent data, we find a sharper reduction in wage inequality over the 2000s, parallel to China’s accession to the WTO. Our reduced-form analysis of the China shock suggests that some firms are harmed by import competition, while others profit from increased exports and cheaper inputs. We rationalize these patterns by extending Helpman et al. (2017) to include sector heterogeneity in trade exposure and firm-level selection into imports. Our calibrated model indicates that the rise of China leads to a reduction in cross-firm wage inequality in Brazil since the cross-sectoral effect - which tends to benefit low-wage sectors and hurt high-wage sectors - dominates the within-sector - increase in inequality due to a rise in importing and exporting firms. In the second paper, I study the worker-level effects of the China shock on the Brazilian formal labor market. Bilateral trade integration with China has a two-sided effect: import and export exposure. My estimates suggest that high exposure to import competition reduces earnings and formal employment, whereas high exposure to exports increases earnings and employment. Moreover, I use the concept of remoteness to analyze how workers adjust to trade shocks. Remoteness establishes a distance between workers and other occupations within the same region so that more remote workers face higher adjustment costs. As a result, remoteness amplifies earnings and employment, mainly on high-educated and high-experienced remote, who bear higher losses under import exposure and higher gains under export exposure. My findings suggest that remoteness and occupation-specific human capital are a source of attrition worth considering when formulating compensation policies for winners and losers from trade.
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