Small declines in employment may hide substantial job churning however. The contrast between studies at the industry level and at the firm level is revealing in this respect. Seddon and Wacziarg (2001) used industry-level data to examine the impact of trade liberalization episodes on movements of labor across sectors. Their study found some labor reallocation between narrowly defined manufacturing activities. But the estimated effects were statistically insignificant and small in magnitude. On the other hand, Levinsohn (1999) used firm-level data to examine the pattern of job creation and job destruction in Chile during trade liberalization. Whereas net employment in manufacturing fell by about 8 percent, in all years in this period about a quarter of all workers changed jobs.

Globalization also affected the nature of jobs in formerly protected sectors. In Morocco, there were significant employment losses in specific groups of firms, which started to rely more on low-pay, temporary workers. The share of temporary employment in manufacturing rose by nearly twenty percentage points between 1984 and 1990. In Mexico, trade reform reduced the rents available to be captured by firms and workers. As a result, an average tariff reduction of 20 percentage points led to an implied wage reduction of more than 5 percent. In Uruguay, trade liberalization was associated with lower wages in the period when trade unions were not active, despite the considerable reduction in employment. In the period with active unions, the membership rate was strongly correlated with tariff barriers and concentration at the industry level. This correlation suggests that workers in protected sectors enjoy higher wages and better working conditions than their counterparts in sectors exposed to foreign competition.

Overall, these studies show that there was pervasive rent sharing between the protected enterprises and their workers. The removal of trade barriers makes workers lose those rents, either because they lose their jobs altogether, or because the rent attached to their jobs becomes smaller. This interpretation is consistent with the one offered for the effect of globalization on the gender gap in earnings. In both cases, increased competition in product markets appears to reduce the size of labor market rents enjoyed by either employers or employees. On the other hand, there is no strong evidence to support the claim that labor demand has become more elastic as a result of globalization (Chinoy, Krisna, and Mitra, 1998; Maloney and Fajnzylber, 2000).

Another source ofjob destruction has been the downsizing of state-owned enterprises and government agencies. The most dramnatic retrenchment episodes took place in transition economies, where millions of workers needed to be reallocated to the private sector. But all regions in the world have had their dose of downsizing in recent years (Haltiwanger and Singh, 1999; Kikeri, 1997). In some cases, up to a half of the workforce in state-owned enterprises needs to be considered redundant, if those enterprises are to be run as private firms (Belser and Rama, 2001). It could be argued that public sector downsizing is not directly connected to globalization, but the two are not independent either. Countries that remain isolated from the outside world can keep their state sectors untouched for much longer.

Studies following public sector workers after retrenchment, or comparing their earnings and benefits to those of similar private sector workers, reveal a consistent 13