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Trade Liberalisation and Wage Inequality in the Bangladesh Manufacturing Sector, 1973-1994

Author

Listed:
  • Hossain, Mohammad A

    (Professor, Department of Economics, University of Chittagong, Bangladesh.)

Abstract

This paper assesses the impact of trade liberalisation on wage inequality in the Bangladesh manufacturing sector over the period 1973-1994 by applying alternative techniques of two-stage least squares and error correction modeling. The study also examines the hypothesis that skilled labour and physical capital are complementary with each other. The study finds that wage inequality in the Bangladesh manufacturing sector, as measured by the ratio of the non-production workers’ wage to the production workers’ wage as well as by the Theil’s wage inequality index, has widened over time. The econometric results suggest that export orientation of the Bangladesh manufacturing sector has contributed to the widening of wage inequality, while the relative demand for skilled workers had an offsetting effect. Furthermore, the findings do not support the claim that skilled labour and capital are complementary with each other.

Suggested Citation

  • Hossain, Mohammad A, 2011. "Trade Liberalisation and Wage Inequality in the Bangladesh Manufacturing Sector, 1973-1994," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 34(3), pages 31-53, September.
    • Handle: RePEc:ris:badest:0522
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    References listed on IDEAS

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    Cited by:

    1. Mausumi Kar & Saibal Kar, 2017. "Multi Fibre Arrangement and Wage Inequality: Firm and State-level Evidence from India and a Theoretical Model," The World Economy, Wiley Blackwell, vol. 40(7), pages 1473-1493, July.

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    More about this item

    Keywords

    Trade Liberalisation; Wage Inequality; Manufacturing Sector; Manufacturing Sector; 1973-1994;
    All these keywords.

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General

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