Trade integration and inter-sectoral reallocation of workers in Colombia, 1986-2006
DOI:
https://doi.org/10.17533/udea.le.n84a03Keywords:
structural change, international trade, aggregate productivity, labour market, ColombiaAbstract
This paper investigates empirically the impact of the deepening trade integration of Colombia on the transitions of workers across sectors, and then the effect of these transitions on aggregate productivity. Using microdata on workers, I find that the evolution of trade integration induced net flows of workers towards less productive sectors, resulting in a negative impact on aggregate productivity. While this effect of the increasing trade integration on inter-sectoral transitions is statistically identifiable among the whole sample of workers, it is actually driven by the subsample of least educated workers. A one-standard deviation change in the variation of the trade integration indicator raises the probability of moving to a less productive sector by more than three percentage points for the whole sample, whereas the probability raises by five percentage points within the subsample of least educated workers.
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