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Impact of Trade on Labour Productivity and Wage Inequality in India

Author

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  • Hashim, Danish
  • Banga, Rashmi

Abstract

The paper empirically estimates the impact of trade on labour productivity and wage inequality between skilled (white collar) and unskilled (blue collar) labour in Indian manufacturing. Analysis is undertaken using dynamic panel data estimations (GMM) for 58 manufacturing industries for the period 1998-99 to 2004-05. The results show that export intensity of industries has positively impacted productivity of unskilled labour while import competition has led to higher productivity of both skilled and unskilled labour. However, trade has led to increase in wage inequalities between skilled and unskilled labour implying that it has increased the wages of skilled labour more than the unskilled labour.

Suggested Citation

  • Hashim, Danish & Banga, Rashmi, 2009. "Impact of Trade on Labour Productivity and Wage Inequality in India," MPRA Paper 35200, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:35200
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    File URL: https://mpra.ub.uni-muenchen.de/35200/1/MPRA_paper_35200.pdf
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    References listed on IDEAS

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    Cited by:

    1. Sharma, Chandan & Mishra, Ritesh Kumar, 2015. "International trade and performance of firms: Unraveling export, import and productivity puzzle," The Quarterly Review of Economics and Finance, Elsevier, vol. 57(C), pages 61-74.
    2. Furuta, Manabu, 2016. "Trade Liberalization and Wage Inequality in the Indian Manufacturing Sector," MPRA Paper 73709, University Library of Munich, Germany.

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    More about this item

    Keywords

    Trade and Wage Inequality; labour productivity; wage inequality between skilled and unskilled labour; Wage Inequality; Indian manufacturing and labour productivity; Indian manufacturing and wage inequality; Labour productivity of unskilled labour;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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