Regional integration and the labour market: The Brazilian case

Brazil is currently engaged in various trade negotiations. One of the aspects that must be taken into account when appraising these negotiations is their impact on employment. This article estimates the effects on employment of two of the main trade agreements in which Brazil may participate, based on the labour content of its trade, by the workers? skill level. Brazil is a net exporter of labour, especially less skilled labour. Our results show that, in the three alternatives considered here—the agreement between MERCOSUR and the European Union; the Free Trade Area of the Americas (FTAA), and the entry in force of both of them? nearly 230,000 jobs would be generated, representing an increase of 0.4% in Brazilian total employment. In aggregate terms, FTAA is the option which would generate more jobs. The workers benefiting most from these agreements would be those with the lowest levels of skills.