Essays on Structural Transformation and Trade

Abstract

This dissertation examines the dynamics of structural transformation and employment structure in developing countries, the impact of trade liberalization on these dynamics, and, finally, the empirical methods used to estimate this impact. In the first chapter, I document that while structural transformation out of agriculture has historically entailed a transition from self-employment to wage employment, sub-Saharan Africa has diverged from this pattern in having a particularly high level of self-employment. I provide some evidence that this could be due to variation in the drivers of structural transformation across regions, namely an increase in agricultural productivity or natural resource export earnings, rather than an increase in non-agricultural productivity. In the second chapter, I study the impact of trade liberalization on regional structural transformation and industrialization in Brazil. I show that Brazil's import tariff reductions in the early 1990s actually had a positive impact on manufacturing labor demand, accelerating the transition out of informal agriculture, and reallocating employment towards manufacturing and formal services rather than informal services. In the final chapter of the dissertation, I apply a critical lens to Bartik-style regional trade shocks, the empirical method used to estimate the regional effects of trade policy. To ensure that the interpretation of the results are consistent with the underlying theory, I propose a simple test that checks for consistency between industry-level and regional-level outcomes, and demonstrate the application of the test in the context of trade liberalization in Brazil.