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...

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Main Authors:	Artuc, Erhan, Lederman, Daniel, Rojas, Diego
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank Group, Washington, DC 2015
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

id	okr-10986-21152
recordtype	oai_dc
spelling	okr-10986-211522021-04-23T14:04:01Z The Rise of China and Labor Market Adjustments in Latin America Artuc, Erhan Lederman, Daniel Rojas, Diego 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 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. 2015-01-07T22:23:40Z 2015-01-07T22:23:40Z 2015-01 http://documents.worldbank.org/curated/en/2015/01/23173043/rise-china-labor-market-adjustments-latin-america http://hdl.handle.net/10986/21152 English en_US Policy Research Working Paper;No. 7155 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Group, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research East Asia and Pacific Latin America & Caribbean Latin America China
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	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
spellingShingle	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 Artuc, Erhan Lederman, Daniel Rojas, Diego The Rise of China and Labor Market Adjustments in Latin America
geographic_facet	East Asia and Pacific Latin America & Caribbean Latin America China
relation	Policy Research Working Paper;No. 7155
description	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.
format	Publications & Research :: Policy Research Working Paper
author	Artuc, Erhan Lederman, Daniel Rojas, Diego
author_facet	Artuc, Erhan Lederman, Daniel Rojas, Diego
author_sort	Artuc, Erhan
title	The Rise of China and Labor Market Adjustments in Latin America
title_short	The Rise of China and Labor Market Adjustments in Latin America
title_full	The Rise of China and Labor Market Adjustments in Latin America
title_fullStr	The Rise of China and Labor Market Adjustments in Latin America
title_full_unstemmed	The Rise of China and Labor Market Adjustments in Latin America
title_sort	rise of china and labor market adjustments in latin america
publisher	World Bank Group, Washington, DC
publishDate	2015
url	http://documents.worldbank.org/curated/en/2015/01/23173043/rise-china-labor-market-adjustments-latin-america http://hdl.handle.net/10986/21152
_version_	1764447789343834112

The Rise of China and Labor Market Adjustments in Latin America

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