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Trade Liberalization and the Returns to Education: A Pseudo-panel Approach

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  • Andy Dickerson
  • Francis Green
  • Jorge Saba Arbache

Abstract

We investigate the impact of trade liberalization on wages and the returns to education in Brazil. Our pseudo-panel estimates of the returns are significantly lower than OLS estimates, signifying omitted ability bias in traditional cross-section estimated returns in developing countries. Trade liberalization impacted on wages and the returns to education in both traded and non-traded sectors, suggesting important spill-over effects. Wages in both sectors fell in the period immediately after trade reform, with some compression of the skilled wage premium especially at the top of the distribution. Subsequently, there has been some recovery in wages, especially in the non-traded sector.

Suggested Citation

  • Andy Dickerson & Francis Green & Jorge Saba Arbache, 2001. "Trade Liberalization and the Returns to Education: A Pseudo-panel Approach," Studies in Economics 0114, School of Economics, University of Kent.
    • Handle: RePEc:ukc:ukcedp:0114
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    3. Lederman, Daniel & Rojas, Diego, 2014. "Export shocks and the volatility of returns to schooling : evidence from twelve Latin American economies," Policy Research Working Paper Series 7144, The World Bank.
    4. Margherita Comola & Luiz de Mello, 2013. "Salaried employment and earnings in Indonesia: new evidence on the selection bias," Applied Economics, Taylor & Francis Journals, vol. 45(19), pages 2808-2816, July.
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    6. D. Lederman & W.F. Maloney & J. Messina, 2011. "The Fall of Wage Flexibility," World Bank Publications - Reports 23575, The World Bank Group.

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    More about this item

    Keywords

    Trade Liberalization; Returns to Education; Pseudo-Panel;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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