The Rise of China and Labor Market Adjustments in Latin America
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World Bank Group, Washington, DC
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This paper assesses the impact of the
rise of China on the trade of Latin American and Caribbean
economies. The study proposes an index to measure the impact
on trade, which suggests sizable effects, especially in
Argentina, Brazil, Chile, Honduras, Mexico, and Paraguay.
The paper uses the index and a model of labor mobility, to
calculate the impact of China's growth on labor markets
in Argentina, Brazil, and Mexico. The resulting evidence
suggests that the rise of China has had positive effects on
agriculture and mining in Argentina and Brazil, which offset
negative impacts on manufacturing industries, thus leaving
total employment and real wages virtually unchanged in the
long run. In contrast, the estimated impacts of China's
rise on Mexico imply that the sizable shock to manufacturing
was not offset by the positive shocks on mining and
agriculture, reducing employment in the long run. The paper
also discusses the effect of China on the degree of
informality in these three economies and contrasts short-run
and long-run effects on employment and wages across industries.
Palabras clave
ACCOUNTING, ADJUSTMENT COSTS, ADJUSTMENT PROCESS, AGGREGATE DEMAND, AGRICULTURAL PRICE, AGRICULTURE, AVERAGE WAGE, BILATERAL TRADE, CENTRAL BANK, COMMERCE, COMMODITY PRICES, COMPARATIVE ADVANTAGE, COMPARATIVE ANALYSIS, COMPETITIVE MARKETS, CONSUMER PRICE, CONSUMER PRICE INDEX, CONSUMERS, CONSUMPTION EXPENDITURES, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DISCOUNTED VALUE, DOMESTIC PRICE, DOWNWARD PRESSURE, ECONOMIC RESEARCH, ECONOMICS RESEARCH, EMPLOYMENT LEVEL, EMPLOYMENT STATUS, ENTRY COST, ENTRY COSTS, EXOGENOUS SHOCKS, EXPECTED VALUES, EXPECTED WAGES, EXPORT BASKET, EXPORT DEMAND, EXPORT GROWTH, EXPORT MARKET, EXPORT STRUCTURE, EXPORT STRUCTURES, EXPORT SUPPLY, GDP, GENERAL EQUILIBRIUM, GLOBAL TRADE, GROWTH RATE, HIGH WAGE, HOTELS, HOUSEHOLD SURVEY, HUMAN CAPITAL, IMPORT COMPETITION, IMPORT SHARE, IMPORTS, INCOME, INFORMAL EMPLOYMENT, INFORMAL SECTOR, INTERNATIONAL TRADE, JOBS, LABOR ADJUSTMENT, LABOR ADJUSTMENT COSTS, LABOR ALLOCATION, LABOR ALLOCATIONS, LABOR DEMAND, LABOR FLOW, LABOR FORCE, LABOR MARKET, LABOR MARKET ADJUSTMENT, LABOR MARKETS, LABOR MOBILITY, LABOR REALLOCATION, LABOR SHARE, LABOR SUPPLY, LABOUR, LOCAL LABOR MARKET, LOCAL LABOR MARKETS, MANUFACTURING INDUSTRIES, MARGINAL PRODUCT, MARKET CONDITIONS, MARKET SECTOR, MARKET SHARE, MONOPOLISTIC COMPETITION, NET EXPORTS, OPEN ECONOMIES, OPEN ECONOMY, OPTIMIZATION, PERFECT COMPETITION, POSITIVE EFFECTS, PREVIOUS SUBSECTION, PRICE CHANGE, PRICE CHANGES, PRICE EFFECT, PRODUCTION FUNCTION, PRODUCTION FUNCTIONS, PRODUCTIVITY, REAL WAGE, REAL WAGES, RETAIL, RISK NEUTRAL, SUBSTITUTES, SUPPLY CURVES, SUPPLY EQUATIONS, TOTAL EMPLOYMENT, TRADE BALANCE, TRADE DATA, TRADE REFORM, UNEMPLOYED, UNEMPLOYMENT, UTILITY FUNCTION, VALUE ADDED, WAGE BILL, WAGE DIFFERENTIALS, WAGE DISTRIBUTION, WAGES, WORKER, WORKERS, WORKING CONDITIONS, WORLD MARKET, WORLD MARKETS, WORLD TRADE