ABSTRACT
The conventional emphasis of the impact of trade liberalization and globalization on labor markets is on the adjustment consequences pertaining to such outcomes as wages, employment and wage inequality. These direct impacts are important, but possibly more important is the indirect impact on social and labor market policies. This chapter analyzes the two-way interaction – the impact of social policy on the liberalization process, and the impact of liberalization on the social policy making process – in the context of labor markets in North America and, more particularly, in Latin America and the Caribbean basin. It focuses on the conceptual level, using illustrative examples. The chapter deals with a discussion of the effects of social and labor market policy on the process of liberalization and globalization. The effect of labor market and social policy initiatives on the labor adjustment process depends in large part on the nature of the policy initiative.
