Dix-Carneiro and Kovak Trade Reform and Regional Dynamics and 2003, the response of earnings to _RTCr_ increased by a factor of 11.6, while the ADH export response stayed roughly constant, and the ADH import response declined. The import and export coefficients grow only in the last few years of the sample, precisely when the earnings effects level off, but the export standard errors also increase substantially during 2008-10, such that the point estimates are not significantly different from zero. Table 3 Panel B confirms this point by directly controlling for import and export growth, with minimal effect on the liberalization coefficients. Note that these controls also rule out the potential confounding effects of the commodity price boom of the 2000s (Costa et al. 2014) or correlated tariff cuts in Brazil’s export destinations (McCaig 2011). Both of these phenomena would be reflected in a positive correlation with _RTCr_ that grows over time, yet we find no evidence of this pattern.

Other potential confounders are the Brazilian Real devaluations that occurred in 1999 and 2002. To the extent that industries were differentially affected by the exchange rate movements, the depreciations could induce correlation with tariff changes across industries. We construct industry-specific real exchange rates as trade-weighted averages of real exchange rates between Brazil and its trading partners.<sup>28</sup> We then take the change in log real exchange rate from 1990 to year _t_ for each industry, and calculate regional shocks using weighted averages as in (3). Panel C includes this control in the earnings analysis, again with little effect on the scale or time pattern of the liberalization coefficients. There was also a substantial wave of privatization during our sample period. Beginning in 1995, the RAIS data allow us to identify as state-owned any firm at least partly owned by the government.<sup>29</sup> In Panel D of Table 3 we control for the change in the (regional) share of workers employed in state owned firms between 1995 and year _t_ , again with little effect on the liberalization Along with these controls for post-liberalization shocks, we implemented a wide variety of robustness tests. Table 3 Panel E utilizes the panel nature of RAIS to account for unobservable worker characteristics by controlling for worker fixed effects when estimating regional wage premia. This approach is an alternative to our main specifications, which control for observable characteristics and allow the returns to these characteristics to vary over time. As shown in Panel E, both approaches yield similar results, indicating that our findings are not driven by workers sorting on unobservable characteristics. Panel F controls for formal earnings pre-trends over the 19801991 time period using Census data rather than the 1986-1990 pre-trends from RAIS in our main specifications. The coefficients on _RTCr_ are minimally affected.

Panels G and H examine changes in formal earnings premia in the manufacturing and nontradable sectors, respectively. Each individual sector exhibits a very similar pattern to overall earnings across sectors, supporting the assumptions of sectoral factor mobility and equilibrium adjustment

> 28Real exchange rates by country pair and year come from the Penn World Tables, while trade weights, measured for 1990, are based on Comtrade data.

> 29The Brazilian privatization program started in 1991 with the administration of President Collor, but was significantly boosted during President Cardoso’s administration (1995-2002).

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