Trade Liberalization in Peru: Adjustment Costs Amidst High Labor Mobility

March 9, 2017

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Elin Baldárrago, and Gonzalo Salinas. Trade Liberalization in Peru: Adjustment Costs Amidst High Labor Mobility, (USA: International Monetary Fund, 2017) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

While trade integration has been an engine of global growth and prosperity, as suggested by theory, some sectors have been negatively affected by increased import competition. We test if this negative effect is significant in a context of high intranational migration, as theory indicates that labor mobility could reduce it. We focus on the 2004-14 period of trade liberalization in Peru (a major beneficiary of trade integration), which allows for methodological improvements relative to similar studies. We find that districts competing with liberalized imports experienced significantly lower growth in consumption per capita despite some emigration in response to increased import competition. This underscores the need to support the “losers of trade liberalization” even amidst high labor mobility.

Subject: Imports, International trade, Labor, Labor mobility, Poverty, Tariffs, Taxes, Trade liberalization

Keywords: Barriers coverage, District level tariff, District tariff, District tariff indicator, District tariff reduction, Global, Import, Import tariff, Imports, Imports-competition channel, Labor mobility, Liberalization, MFN tariff, Peru, Poverty, Poverty gap, South America, Tariff, Tariff barrier, Tariff line, Tariff measure, Tariff reduction, Tariffs, Trade Liberalization, WP

Publication Details

Pages:

26
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2017/047
Stock No:

WPIEA2017047
ISBN:

9781475585568
ISSN:

1018-5941

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