Trade Liberalization and Intersectoral Labor Movements

This paper examines the impact of trade liberalization episodes on movements of labor across sectors. The aim is to evaluate the empirical support for two classes of models: those where the effects of trade are mediated by structural change, and those where the effects of trade do not rely on such sectoral shifts. Our results provide evidence consistent with the latter. Surprisingly, we find small or negative effects of liberalization on intersectoral labor shuffling at the economy-wide 1-digit level of disaggregation. Increased sectoral change at the 3 and4 digit levels within manufacturing, as a result of trade liberalization,. is mainly attributable to increases in manufacturing labor supply that is spread unevenly across sectors, rather than to movements of jobs across manufacturing subsectors.