*In this paper we determine to what extent China's June 2010 decision to shift from a fixed exchange rate regime to a managed floating regime with reference to a basket of currencies, has enabled its currency to be disentangled from the USD. Unlike previous studies which quasi exclusively focused on currency dynamics, we reorient the strategy toward the detection of the long-run relationships leading to the use of a Markov-switching Error Correction model in lieu of the usual purely dynamic Frankel and Wei methodology. Using daily data over September 2010 to December 2015, we show that the US dollar has always been the only currency with which the RMB has kept a long-run relationship. In the short run the euro from September 2010 to February 2014 and the yen from April 2012 to February 2014 entered the RMB’s basket, though with negligible weights.

**The relationship between international trade and labor markets has been left apart from the theoretical discussion in each of both fields, with some exceptions as the Stolper-Samuelson theorem. In contrast, many empirical studies have shown the correlation of trade integration and changes in wages, technological change, informal labor, etc, especially in developed countries, but also in some developing countries. Indeed, a kind of “racing to the bottom” among the latest has been documented, as countries tend to compete in the global economy by reducing labor standards.  

Using an extension of Melitz (2003) model, about international trade with heterogeneous firms, we return to the Colombian case to analyze theoretically a situation where a country applies simultaneously trade openness and labor market flexibilization policies, in order to increase competitiveness and decrease labor informality. According to productivity levels, we consider two types of firms, informal and formal. Such classification corresponds also to the size measured as number of employees, hence, the informal firm hire less than a threshold quantity of workers defined by the policymaker, who fix the flexibility policy. We consider in the model additional fixed and variable labor costs only for formal firms. The final effect on the informal labor market depends on this threshold and on the labor costs.