TY  - CPAPER 
AB  - Uruguay is a small economy. Its integration to MERCOSUR has increased the exposure to regional macroeconomic instability. The aim of this paper is to assess the impact of regional integration on the country’s labour market and poverty. We estimated wage differentials between labour categories, finding a 60 percent wage gap between formal and informal workers. A CGE model with an efficiency wage specification for unskilled labour was built, with results showing that regional shocks deeply affect the Uruguayan economy. The consideration of an efficiency wage model is particularly important when shocks lead to a reallocation of resources towards sectors intensive in unskilled labour. A subsidy on formal, unskilled labour could contribute to decrease informality and therefore increase GDP, but this type of policy needs to be carefully implemented because it may have negative effects on investment. Finally, the effects on poverty and income distribution obtained through microsimulations are consistent with the results of the CGE experiments.
AU  - Terra, Maria Ines
AU  - Bucheli, Marisa
AU  - Laens, Silvia
AU  - Estrades, Carmen
DA  - 2005
DA  - 2005
ID  - 331318
KW  - Labor and Human Capital
KW  - Food Security and Poverty
KW  - Uruguay
KW  - labour market
KW  - general equilibrium model
KW  - regional integration
KW  - efficiency wage
KW  - microsimulation
KW  - poverty
L1  - https://ageconsearch.umn.edu/record/331318/files/1807.pdf
L2  - https://ageconsearch.umn.edu/record/331318/files/1807.pdf
L4  - https://ageconsearch.umn.edu/record/331318/files/1807.pdf
LA  - eng
LA  - English
LK  - https://ageconsearch.umn.edu/record/331318/files/1807.pdf
N1  - Presented at the 9th Annual Conference on Global Economic Analysis, Addis Ababa, Ethiopia
N2  - Uruguay is a small economy. Its integration to MERCOSUR has increased the exposure to regional macroeconomic instability. The aim of this paper is to assess the impact of regional integration on the country’s labour market and poverty. We estimated wage differentials between labour categories, finding a 60 percent wage gap between formal and informal workers. A CGE model with an efficiency wage specification for unskilled labour was built, with results showing that regional shocks deeply affect the Uruguayan economy. The consideration of an efficiency wage model is particularly important when shocks lead to a reallocation of resources towards sectors intensive in unskilled labour. A subsidy on formal, unskilled labour could contribute to decrease informality and therefore increase GDP, but this type of policy needs to be carefully implemented because it may have negative effects on investment. Finally, the effects on poverty and income distribution obtained through microsimulations are consistent with the results of the CGE experiments.
PY  - 2005
PY  - 2005
T1  - The Effects of Increasing Openness and Integration to the MERCOSUR on the Uruguayan Labour Market: A CGE Modeling Analysis
TI  - The Effects of Increasing Openness and Integration to the MERCOSUR on the Uruguayan Labour Market: A CGE Modeling Analysis
UR  - https://ageconsearch.umn.edu/record/331318/files/1807.pdf
VL  - 2004
Y1  - 2005
ER  -