9 Trade and Workforce Changeover in Brazil Marc-Andreas Muendler. Introduction Linked employer-employee data are uniquely suited to document labormarket responses to economic reform. | 4 Globalization Trade and Labor Markets 9 --------------------------- Trade and Workforce Changeover in Brazil Marc-Andreas Muendler Introduction Linked employer-employee data are uniquely suited to document labormarket responses to economic reform. While the formation of multinational enterprises shapes much of the globalization debate over labormarket consequences in industrialized countries see chapter 10 an issue of foremost importance for developing countries is the labor-market impact of trade reform. The present chapter investigates Brazil s labor demand changes following its large-scale trade liberalization in the early 1990s. Measures of labor-demand change document that the workforce in Brazil s traded-goods sector simultaneously undergoes an occupation downgrading and an education upgrading. This workforce changeover is broadly consistent with Heckscher-Ohlin-style trade theory for a low-skill abundant economy whose low-skill intensive activities are predicted to expand and absorb larger shares of skilled workers to maintain full employment. Tracking workers across their jobs within establishments across establishments within industries and across firm types and industries within Brazil s formal sector documents how employers achieve the observed workforce changeover. The reallocation pattern is not what premises of classic trade theory imply among the displaced workers with a successful reallocation most shift to nontraded-output industries but almost as Marc-Andreas Muendler is an assistant professor of economics at the University of California San Diego and a faculty research fellow at the NBER. I thank conference participants at CAFE 2006 in Nuremberg and Lars Vilhuber and Julia Lane in particular for helpful suggestions. I thank Jennifer Poole for dedicated research assistance. I gratefully acknowledge financial support from the NSF under grant SES-0550699 and the Alfred P. Sloan Foundation. .
