Trade Liberalization and its Effects on Labor Fluidity: Evidence from Colombia

This article investigates the effects of trade liberalization on labor fluidity. We use a panel of Colombian firms for the period of 2008 to 2015. There is evidence that the effects of the degree of protection from international trade are dynamically heterogeneous. Before the reduction in tariffs, the relationship between tariffs and all measures of labor fluidity is negative. Once the reduction in tariffs is fully implemented, firms in more protected industries create more jobs than are destroyed, and in this way, these firms contribute to increasing labor market fluidity.

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