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Regional Labor Market Effects of Trade Policy: Evidence from Brazilian Liberalization

a PSC Small Fund Research Project

Investigator:   Brian Kovak

This research quantifies the effects of trade liberalization on local labor market outcomes and workers’ migration patterns in the context of Brazil's 1987-1995 trade liberalization. Findings indicate that regions whose output faced a 10% larger liberalization-induced price decline experienced a 7% larger wage decline. In addition, liberalization resulted in a substantial shift in migration patterns. The most affected Brazilian states gained or lost approximately 2% of their populations as a result of liberalization-induced shifts in migration patterns. These results represent the first systematic evaluation of the effects of liberalization on internal migration.

Funding Period: 09/01/2008 to 12/31/2009

Country of Focus: Brazil

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