A Picture of Wage Inequality and the Allocation of Labour Through a Period of Trade Liberalisation: The Case of Brazil

This paper constructs a picture of the labour market impact of trade liberalisation in Brazil. We examine the level and dispersion of wages, the skilled wage premium, and employment composition before and after trade liberalisation. After trade reform, there was a rise in the returns to college education which, since the share of college workers also rose, is attributable to rising demand. This change did not increase overall wage dispersion because of the small share of college-educated workers and of decreasing returns to intermediate levels of education. Among tradable goods industries, trade liberalisation is associated with increases in relative wages.