Exports, Labor Markets, and the Environment: Evidence from Brazil

TL;DR

This paper investigates the long-term effects of export shocks on employment in Brazilian municipalities, revealing significant impacts on formal and informal employment and highlighting the nuanced relationship between exports and environmentally risky activities.

Contribution

It provides new empirical evidence on how export shocks influence employment dynamics and environmental activity composition in Brazil over two decades.

Findings

Exports increase formal employment with elasticities up to 0.4.

Long-term negative response of informal employment to export shocks.

Environmentally risky activities constitute a larger share of employment and respond differently over time.

Abstract

What is the environmental impact of exports? Focusing on 2000-20, this paper combines customs, administrative, and census microdata to estimate employment elasticities with respect to exports. The findings show that municipalities that faced increased exports experienced faster growth in formal employment. The elasticities were 0.25 on impact, peaked at 0.4, and remained positive and significant even 10 years after the shock, pointing to a long and protracted labor market adjustment. In the long run, informal employment responds negatively to export shocks. Using a granular taxonomy for economic activities based on their environmental impact, the paper documents that environmentally risky activities have a larger share of employment than environmentally sustainable ones, and that the relationship between these activities and exports is nuanced. Over the short run, environmentally risky employment responds more strongly to exports relative to environmentally sustainable employment. However, over the long run, this pattern reverses, as the impact of exports on environmentally sustainable employment is more persistent.