FTAA and Colombia: Income redistribution across labor groups

Abstract

Colombia is set to enter the Free Trade Agreement of the Americas (FTAA), and internal income redistribution can be anticipated. A specific-factors model of production with seven skilled groups of labor is applied using projected price changes for the three major sectors of the economy. Every labor group, except production labor, is projected to lose. The manufacturing capital gains at the expense of capital in agriculture and services. Predicted effects are large, suggesting that economic policy should begin to focus on the pending adjustment to FTAA.