DT 11/12 - Apertura comercial, productividad, empleo y salarios: Un análisis por diferencias-en-diferencias

This paper analyzes the effects of increased competition resulting from the creation of the Southern Common Market (MERCOSUR) on productivity, employment and wages for the Uruguayan manufacturing sector at the plant level. We use impact evaluation techniques –which are not common in trade reform studies– namely matching and difference-in-differences estimation for the period 1988-1995. The definition of an appropriate control group is a big challenge and it may be improved by the use of matching procedures. We define a set of “tradable” and “non-tradable” industries according to the level and stability of the import penetration and export orientation ratio of the industries. We further explore on the behavior of plants belonging to the export oriented and import competing sectors. One of the most robust findings is that increased trade liberalization seems to improve total factor productivity with a greater effect on plants belonging to the import competing sector. Furthermore, we find reductions in employment driven mainly by the decrease in blue collars, increases in wages and a reduction in the wage gap between white and blue collars as a result of increased trade exposure. Thus, the increase in productivity along with the unemployment of unskilled workers would indicate a room for training, labour and social policies in order to countervail the negative impact of trade liberalization on less qualified workers.