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Does tariff liberalization increase wage inequality? Some empirical evidence

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Author Info
Branko Milanovic (Carnegie Endowment for International Peace)
Lyn Squire (Global Development Network)

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Abstract

The objective of the paper is to answer an often-asked question : if tariff rates are reduced, what will happen to wage inequality ? We consider two types of wage inequality : between occupations (skills premium), and between industries. We use two large data bases of wage inequality that have become recently available and a large dataset of average tariff rates all covering the period between 1980 and 2000. We find that tariff reduction is associated with higher inter-occupational and inter-industry inequality in poorer countries (those below the world median income) and the reverse in richer countries. The results for inter-occupational inequality though must be treated with caution.

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Paper provided by EconWPA in its series Labor and Demography with number 0501012.

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Length: 64 pages
Date of creation: 27 Jan 2005
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Handle: RePEc:wpa:wuwpla:0501012

Note: Type of Document - pdf; pages: 64
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Web page: http://129.3.20.41

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Related research
Keywords: tariffs; trade; liberalization; wages; inequality;

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Find related papers by JEL classification:
F1 - International Economics - - Trade
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Beyer, Harald & Rojas, Patricio & Vergara, Rodrigo, 1999. "Trade liberalization and wage inequality," Journal of Development Economics, Elsevier, vol. 59(1), pages 103-123, June. [Downloadable!] (restricted)
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    Other versions:
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  24. Raymond Robertson, 2000. "Trade Liberalisation and Wage Inequality: Lessons from the Mexican Experience," The World Economy, Blackwell Publishing, vol. 23(6), pages 827-849, 06. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Elena Meschi & Marco Vivarelli, 2007. "Globalization and Income Inequality," IZA Discussion Papers 2958, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Ann Harrison & Margaret McMillan, 2007. "On the links between globalization and poverty," Journal of Economic Inequality, Springer, vol. 5(1), pages 123-134, April. [Downloadable!] (restricted)
  3. Birdsall, Nancy, 2006. "Stormy Days on an Open Field: Asymmetries in the Global Economy," Working Papers RP2006/31, World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  4. Ann Harrison, 2006. "Globalization and Poverty," NBER Working Papers 12347, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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