Import competition and social mobility: Evidence from Brazil

Abstract

There is a large body of literature studying the effects of trade shocks on worker’s job and wage losses. However, little is known about whether these effects transmit into the next generation. In this paper, we exploit the increased Chinese import competition in Brazil to evaluate how this shock affected children of exposed fathers. We use an specific survey module containing precise retrospective questions on parental employment and education, among other characteristics. Our findings suggest that children from more exposed fathers have less education and earnings in theiradulthood. We also find a higher likelihood of having and informal or operational employment and social assistance dependence. Importantly, these effects are larger for children from low socioeconomic backgrounds, suggesting that the trade shock decreased intergenerational mobility and accentuated poverty traps.