Agro-Manufactured Export Prices, Wages and Unemployment

This paper estimates the impacts of world agricultural trade liberalization on wages, employment and unemployment in Argentina, a country with positive net agricultural exports and high unemployment rates. In the estimation of these wage and unemployment responses, the empirical model allows for individual labor supply responses and for adjustment costs in labor demand. The findings show that a 10 percent increase in the price of agricultural exports would cause an increase in the Argentine employment probability of 1.36 percentage points, matched by a decline in the unemployment probability of 0.75 percentage points and an increase in labor market participation of 0.61 percentage points. Further, the unemployment rate would decline by 1.23 percentage points (by almost 10 percent). Expected wages would increase by 10.3 percent, an effect that is mostly driven by higher employment probabilities. This indicates that the bulk of the impacts of trade reforms originates in household responses in the presence of adjustment costs, and that failure to account for them may lead to significant biases in the welfare evaluation of trade policy.

Bibliographic Details

Main Author:	Porto, Guido
Format:	Policy Research Working Paper biblioteca
Language:	English
Published:	Washington, DC: World Bank 2008-01
Subjects:	ACTIVE LABOR, ADJUSTMENT COSTS, AGGREGATE UNEMPLOYMENT, AGRICULTURAL PRICES, AGRICULTURE, AVERAGE WAGE, AVERAGE WAGES, CHILD LABOR, COLLEGE EDUCATION, COMMODITIES, COMMODITY, COMMODITY PRICES, COMPARATIVE ADVANTAGE, CURRENCY, DEMAND CURVE, DEMAND CURVES, DEMAND FUNCTIONS, DEREGULATION, DEVELOPMENT POLICY, ECONOMETRIC MODELS, ECONOMETRICS, ECONOMIC ACTIVITY, ECONOMICS, EDUCATIONAL LEVELS, EFFICIENCY WAGES, EMPLOYMENT EFFECT, EMPLOYMENT INCREASES, EMPLOYMENT OPPORTUNITIES, EMPLOYMENT PROBABILITIES, EMPLOYMENT PROBABILITY, EMPLOYMENT STATUS, EMPLOYMENT TRENDS, EQUILIBRIUM PRICES, EQUILIBRIUM UNEMPLOYMENT, ESTIMATED PARAMETERS, EXCHANGE RATES, EXPECTED WAGE, EXPECTED WAGES, EXPENDITURES, EXPORTS, FACTOR MARKETS, FACTOR PRICES, FEDERAL RESERVE, GENERAL EQUILIBRIUM, GENERAL EQUILIBRIUM MODELS, HIGH UNEMPLOYMENT, HIGH UNEMPLOYMENT RATES, HOUSEHOLD CHARACTERISTICS, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, INCOME, INCOME DISTRIBUTION, INCOME INCREASES, INCOME SUPPORT, INTERNATIONAL MARKETS, INTERNATIONAL PRICE, INTERNATIONAL PRICES, INTERNATIONAL TRADE, JOB LOSSES, JOB OFFER, JOB OFFERS, JOBS, LABOR DEMAND, LABOR FORCE, LABOR MARKET, LABOR MARKET ADJUSTMENT, LABOR MARKETS, LABOR REALLOCATION, LABOR SUPPLY, LABOUR, LABOUR ADJUSTMENT, LABOUR SUPPLY, LIQUIDITY, LOCAL LABOR MARKETS, LOW-INCOME, MACROECONOMIC CONTEXT, MARGINAL PRODUCTIVITY, MARKET PRICE, MARKET PRICES, MARKET WAGE, MARKET WAGES, MARKETING, MARRIED WOMAN, MARRIED WOMEN, MAXIMUM LIKELIHOOD ESTIMATION, MINIMUM WAGE, MINIMUM WAGES, NAIRU, NATIONAL MODELS, NATURAL RATE OF UNEMPLOYMENT, NATURAL RESOURCES, NEW JOBS, OPEN ECONOMY, POLITICAL ECONOMY, PREVIOUS SECTION, PRICE CHANGE, PRICE CHANGES, PRICE INCREASE, PRICE INDEX, PRICE INDEXES, PRICE LEVEL, PRIMARY EDUCATION, PRODUCTIVITY, REGIONAL UNEMPLOYMENT, RESERVE BANK, RURAL LABOR, RURAL LABOR MARKETS, SAHARA, SEARCH COSTS, SECONDARY EDUCATION, SEMISKILLED LABOR, SHADOW PRICES, SKILL PREMIUM, SKILLED LABOR, STATE UNIVERSITY, TARIFF BARRIERS, TELECOMMUNICATIONS, TOTAL EMPLOYMENT, TRADE BARRIERS, TRADE LIBERALIZATION, TRADE POLICIES, TRADE POLICY, TRADE REFORMS, TRANSACTION, TRANSACTIONS COSTS, UNEMPLOYED, UNEMPLOYED INDIVIDUALS, UNEMPLOYED PEOPLE, UNEMPLOYED PERSON, UNEMPLOYED WORKERS, UNEMPLOYMENT, UNEMPLOYMENT BENEFITS, UNEMPLOYMENT RATE, UNSKILLED LABOR, UNSKILLED WORKERS, URBAN EMPLOYMENT, UTILITY MAXIMIZATION, WAGE ADJUSTMENT, WAGE DIFFERENTIALS, WAGE EFFECT, WAGE EFFECTS, WAGE RATES, WORK FORCE, WORKER, WORKERS, WORKING AGE, WORKING AGE POPULATION, WORLD MARKETS, WORLD TRADE, WORLD TRADE ORGANIZATION, WORTH, WTO,
Online Access:	http://documents.worldbank.org/curated/en/2008/01/8965647/agro-manufactured-export-prices-wages-unemployment http://hdl.handle.net/10986/6471
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