Local Economic Development Through Export-Led Growth: The Chilean Case

Abstract

We study the causal impact of export growth on Chilean local economic development during 2000–2006 by exploiting spatial and temporal variations in local exposure stemming from the interaction ofpast differences in industry specialization across local labor markets and the evolution of tariffs cutsand exports across industries. We find that growing exports implied a significant reduction in laborinformality and labor income gains in more exposed local markets, driven by job creation and wagegrowth in the formal sector. These effects concentrate on senior skilled workers. Exposed locationsalso exhibit a greater relative decline in the poverty rate.