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While neoclassical theory emphasizes the impact of trade on wage inequality between occupations and sectors, more recent theories of firm heterogeneity point to the impact of trade on wage dispersion within occupations and sectors. Using linked employer-employee data for Brazil, we show that much of overall wage inequality arises within sector-occupations and for workers with similar observable characteristics; this within component is driven by wage dispersion between firms; and wage dispersion between firms is related to firm employment size and trade participation. We then extend the heterogenous-firm model of trade and inequality from Helpman, Itskhoki, and Redding (2010) and structurally estimate it with Brazilian data. We show that the estimated model fits the data well, both in terms of key moments as well as in terms of the overall distributions of wages and employment, and find that international trade is important for this fit. In the estimated model, reductions in trade

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Abstract Using US Census data for 1990 and 2000, we estimate effects of the NAFTA agreement on the US wages. We look for any indication of effects of the agreement on (i) local labor markets dependent on industries vulnerable to import competition from Mexico, and (ii) workers employed in industries competing with Mexican imports. We find evidence of only modest local labor-market effects, but evidence for a strong industry effect, dramatically lowering wage growth for blue-collar workers in the most affected industries. These distributional effects are much larger than aggregate welfare effects estimated by other authors. In addition, we find strong evidence of anticipatory adjustment in places whose protection was expected to fall but had not yet fallen; this adjustment appears to have conferred an anticipatory rent to workers in those locations.

We empirically study the dynamics of labor market adjustment following the Brazilian trade reform of the 1990s. We use variation in industry-specific tariff cuts interacted with initial regional industry mix to measure trade-induced local labor demand shocks, and then examine regional and individual labor market responses to those one-time shocks over two decades. Contrary to conventional wisdom, we do not find that the impact of local shocks is dissipated over time through wage-equalizing migration. Instead, we find steadily growing effects of local shocks on regional formal sector wages and employment for 20 years. This finding can be rationalized in a simple equilibrium model with two complementary factors of production, labor and industry-specific factors such as capital, that adjust slowly and imperfectly to shocks. Next, we document rich margins of adjustment induced by the trade reform at the regional and individual level. Workers initially employed in harder hit regions face continuously deteriorating formal labor market outcomes relative to workers employed in less affected regions, and this gap persists even 20 years after the beginning of trade liberalization. Negative local trade shocks induce workers to shift out of the formal tradable sector and into the formal nontradable sector.

A recent boom in commodities-for-manufactures trade between China and other developing countries has led to much concern about the losers from rising import competition in manufacturing, but little attention on the winners from growing Chinese demand for commodities. Using census data for Brazil, we find that local labour markets more affected by Chinese import competition experienced slower growth in manufacturing wages and in-migration rates between 2000 and 2010, and greater rises in local wage inequality. However, in locations benefiting from rising Chinese demand, we observe higher wage growth, lower takeup of cash transfers and positive effects on job quality.

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This paper investigates the effect of environmental aspects on internal migration flows in Brazil, focusing specifically on drought. Internal migration in Brazil is analyzed by using bilateral migration rates between states. The palmer drought severity index is used as a measurement of drought. The results show that drought has a significant effect on inter-state migration flows in Brazil. An increase in drought in the state of origin or a decrease in drought in the state of destination increases bilateral migration at a decreasing rate. Two other environmental variables that are analyzed are land degradation and deforestation. Based on the results of two different measures of deforestation, the suggestion was made that in general out-migration decreases with deforestation due to increased work-opportunities. However when only deforestation because of agricultural land expansion is considered, this effect will not exceed the negative effects of deforestation. Concerning land degradation, no clear evidence was found for its expected effect on migration.

This paper considers the welfare and distributional consequences of higher relative food prices in rural India through the lens of a specific-factors, general equilibrium, trade model applied at the district level. My evidence shows that nominal wages for manual labor both within and outside of agriculture respond elastically to increases in producer prices; i.e., wages rose faster in rural districts growing more of those crops with large price run-ups over 2004-09. Accounting for such wage gains, I find that rural households across the income spectrum benefit from higher agricultural commod-ity prices. Indeed, rural wage adjustment appears to play a much greater role in protecting the welfare of the poor than the Public Distribution System, India’s giant food-rationing scheme. Moreover, policies, like agricultural export bans, which insulate producers (as well as consumers) from international price increases, are particularly harmful to the poor of rural India. Conventional welfare analyses that assume fixed wages and focus on households ’ net sales position lead to radically different conclusions. ∗E-mail:

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