The Rise of China and Labor Market Adjustments in Latin America

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.

Bibliographic Details

Main Authors:	Artuc, Erhan, Lederman, Daniel, Rojas, Diego
Format:	Policy Research Working Paper biblioteca
Language:	English en_US
Published:	World Bank Group, Washington, DC 2015-01
Subjects:	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,
Online Access:	http://documents.worldbank.org/curated/en/2015/01/23173043/rise-china-labor-market-adjustments-latin-america http://hdl.handle.net/10986/21152
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