Research & Publications

Thematic Areas

The trade and labor markets outcomes in developing countries project is organized around five modula areas. Click on the selected area for more information and to access the research output.

Toggle (-/+) Thematic Areas

Module 1 - Global Trade Reforms with Labor Mobility Costs

Our analysis comprises three building blocks. The first block is the construction of a global model of trade among many countries. This model provides the economic structure that is needed to identify how world prices of exports and imports will react following a (global) trade reform. These reforms may be global in nature, as in the case, for instance, of a Doha Development Agenda. The reforms may instead deal with regional trade agreements between developing countries, or between a set of developing countries and some developed countries, as in the case, for instance of an EPA (Economic Partnership Agreement) between Africa and the EU.

The second building block is the estimation of a set of parameters to capture the costs of sectoral labor mobility in the developing world. These parameters are needed to assess the gradual labor market responses that will take place after a trade reform. The labor mobility costs will govern how fast employment and wage in the local economy can react to changes in the external environment.

The last building block is a model of the domestic economy that will describe how countries will adjust to the trade reforms (stemming from the first building block) in the presence of labor mobility costs (from the second building block). The model will allow us to perform simulations of the reaction of the economy, and how these reactions are mapped into changes in sectoral wages, employment, and welfare.

Title: A Mapping of Labor Mobility Costs in the Developing World
Authors: Erhan ARTUC, Daniel LEDERMAN, and Guido PORTO

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Title: A Mapping of Labor Mobility Costs in the Developing World, by Erhan ARTUC, Daniel LEDERMAN, and Guido PORTO. Forthcoming in Journal of International Economics.

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Module 2 - Wages and Employment Gains from Exports

We systematically explore the relationship between exports, employment, and wages in developing countries (including low income countries). The analysis builds on the notion that export markets bring gains to the domestic economy. Support for this argument comes from two empirical observations. One establishes that exporting firms pay higher wages and hire more workers than non-exporters. The other establishes a positive link between exports, wages and skill utilization at the industry level.

Using a combination of micro-data for almost all developing countries and cross-country, industry-level data, we will quantitatively document the potential gains from export opportunities. This will be done by establishing links between exports, wages, and employment. Then, the analysis will explore the mechanisms in play, both quantitatively and qualitatively. This will be done by establishing links between export markets and firm/industry attributes. On the export market side, we will investigate the role of product quality demanded by foreign markets and the mechanisms by which quality is produced, namely the demand for high-quality, skilled labor, and the demand for high-quality, imported inputs. On the firm/industry attributes side, we will explore hypothesis related to productivity and technological efficiency, access to services and infrastructure, and overall economic and institutional constraints.

The facts gathered in this research, both on the basic links between exports, wages and employment, on the one hand, and on the mechanisms, on the other, will allow us to derive policies both to boost the beneficial impacts of exports and to ameliorate the risks of global competition.

Title: High-Income Export Destinations, Quality and Wages
Authors: Irene BRAMBILLA and Guido PORTO

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Title: What Really Drives Innovation In Exporting Firms? A Study of the Role of Management Skills in Ghanaian Manufacturing Firms
Authors: Francis MULANGU and Michael KOTTOH

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Title: Wage and Employment Gains from Exports: Evidence from Developing Countries
Authors: Irene BRAMBILLA, Nicolas DEPETRIS-CHAUVIN, and Guido PORTO

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Title: Exports, Price Transmission, and Wage Inequality: Evidence Using the Case of the Impact of AGOA in Ghanaian Manufacturing Firms
Authors: Francis MULANGU

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Title: Exports, Price Transmission, and Wage Inequality: Evidence Using the Case of the Impact of AGOA in Ghanaian Manufacturing Firms, by Francis MULANGU. Forthcoming in Journal of African Development.

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Module 3 - Trade and Unemployment

This module will provide new evidence on the relationship between trade, labor market frictions and unemployment. The analysis will focus on developing countries and will be solidly based on recent theoretical advances. Building on Helpman and Itskhoki (2010) the module will develop a trade model with labor market frictions at the sectoral level to explore how the correlation between comparative advantage (Ricardian or more general measures of comparative advantage) and labor market frictions at the sector level can explain the heterogeneous impact of trade reform on unemployment. The idea is simple: If there is a strong correlation between labor market frictions and sectors in which the country has a comparative advantage, trade reform is likely to increase unemployment as it pushes resources towards sectors with stronger labor market frictions. On the other hand if the correlation is negative, then trade reform is likely to reduce unemployment.

Title: The impact of the Trade Boom on Labor Informality: The Bolivian case
Authors: Rolando Morales, Erick Gomez

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Title: Trade and frictional unemployment in the global economy
Authors: Frédéric Robert-NicoudCéline CarrèreAnja Grujovic

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Title: Institutions, human capital and exports in developing Countries: a firm-level approach
Authors: Bethuel Kinyanjui Kinuthia

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Title: Trade in Unemployment
Authors: Céline CARRERE, Marco FUGAZZA, Marcelo OLARREAGA, and Fréderic ROBERT-NICOUD

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Module 4 - Trade and Informal Labor Markets

This module will study the relationship between trade and informal labor markets in developing countries assessing the effect of trade on informality, the role played by human capital formation on informality and wage premiums.

The first section of this module will study the incidence of trade openness in the labor market, differentiating the formal and informal sectors, identify the determinants of the informal sector, and establish the underlying social mechanisms that shape the labor market. The methodology will be based in an extension of the model proposed in Davalos (2012b) that considers a multiple firms case with homogeneous competitiveness and heterogeneous productivity across firms.

The second section of this module will analyze the role played by human capital formation on informality and wage premiums in open economies. The literature has shown that heterogeneous workers have different outcomes on informal and formal sectors. However none of these previous works have endogeneized the worker´s schooling choice. Heckman et al (1998) develop and estimate an overlapping generation’s general equilibrium model of labor earnings, skill formation, and physical capital accumulation. However they do not explicitly model the informal sector nor their construct an open economy environment that may suffer term-of-trade shocks. We plan to fill the gap in the literature by developing a general equilibrium overlapping generation model with search friction in labor market that addresses all this pertinent issues for labor markets in developing countries. In this sense, we will follow Heckman et al (1998) and Ulyssea (2012).

Title: Voluntary and involuntary labor informality
Authors: 
Rolando Morales, Danilo Agramont and Mónica Cueto

Title: Payroll tax, job search and informality
Authors: 
Zoraida Fernandez

Title: Firm Migration to Informality and Trade Openness in Developing Countries
Authors: Monica Cueto and Erick Gomez

Title: International Trade and Employment in the Bolivian Context
Authors: Gabriel Loza Telleria

Title: Dutch Disease and the Labor Market in Bolivia
Authors: Rolando Morales Anaya, Samuel Alarcón, and Rodrigo Gonzales

Title: Trade openness effects through price channels on firms’ informal employment: The case of Peru
Authors: Jorge Davalos

Title: Informality in an Economy with Active Labor Courts
Authors: Vladimir Ponczek

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Module 5 - Making Globalization more Inclusive: The Role of Skills Development, Transport Infrastructure and Export Promotion Policies in Employment and Wages

The previous four thematic areas will provide the landscape of the relationship between trade and labor markets outcome in developing countries. In this module we seek to identify the policies that would moderate the negative effects of globalization and maximize its benefits. We will study the role played by skill development policies, the provision of transport infrastructure, labor market reforms, and export promotion policies.

Title: Transport Infrastructure, Urbanization and Shipping Costs: An analysis of the effects of an exogenous transport cost reduction on regional development
Authors: Flávia CHEIN and Cristine C. de XAVIER PINTO

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Title: Road and Development: some empirical evidences from Brazilian experience.
Authors: Flávia CHEIN and Cristine C. de XAVIER PINTO

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