Trade, Labor Market Concentration, and Wages
Working Paper 35018
DOI 10.3386/w35018
Issue Date
I estimate the effect of trade on local labor market concentration and its implications for wages using employer-employee linked data and tariff shocks from Brazil’s trade liberalization. Trade increased concentration by 7%, an effect driven by firm exit and worker flows to surviving import-competing firms. Increased concentration reduced wage take-home shares—estimated at 50 cents on the dollar pre-shock—enough to offset small wage gains from reallocation, but did not meaningfully reduce wages on net. Most of the wage declines attributed to Brazil's trade liberalization resulted instead from reductions in the marginal revenue product of labor. Incorporating informality reveals substantial regional heterogeneity.
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Copy CitationMayara Felix, "Trade, Labor Market Concentration, and Wages," NBER Working Paper 35018 (2026), https://doi.org/10.3386/w35018.Download Citation
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