Labor Markets in Regional Trade Agreements: What Do We Know ?

Globalization has failed to relax barriers to the movement of labor, especially unskilled workers. So have North-South Regional Trade Agreements (RTAs), while South-South RTAs have failed to implement good intentions. A literature review of the labor effects of RTAs underscores context specificity precluding generalizations across categories of RTAs. Most ex-ante studies have focused on global welfare effects rather than anticipated labor market effects while ex-post studies have had difficulty isolating any direct effects attributable to implementation of the RTA because of confounding effects as illustrated by a discussion of the wage puzzle in Mexico under NAFTA. The survey reviews labor market and wage results from ex-ante CGE estimates and ex-post household-based econometric estimates.