Does Tariff Liberalization Increase Wage Inequality? Some Empirical Evidence

The objective of the paper is to answer an often asked question: If tariff rates are reduced, what will happen to wage inequality? The authors consider two types of wage inequality: between occupations (skills premium) and between industries. They use two large databases of wage inequality that have recently become available and a large data set of average tariff rates covering the period between 1980 and 2000. The authors 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. However, the results for inter-occupational inequality must be treated with caution.

Bibliographic Details

Main Authors:	Squire, Lyn, Milanovic, Branko
Language:	English
Published:	World Bank, Washington, DC 2005-04
Subjects:	AVERAGE INCOME, AVERAGE INCOMES, AVERAGE TARIFF, CAPITAL ACCOUNT, CAPITAL FLOWS, CHANGES IN TRADE, COMPARATIVE ADVANTAGE, CROSS-COUNTRY REGRESSION, DATA COLLECTION, DATA SET, DECLINING INEQUALITY, DEMOGRAPHICS, DEPENDENT VARIABLE, DEVELOPING COUNTRIES, EARNINGS INEQUALITY, ECONOMIC RESEARCH, EMPIRICAL ANALYSIS, EMPIRICAL ESTIMATION, EMPIRICAL EVIDENCE, EMPIRICAL LITERATURE, EMPIRICAL MODEL, EMPIRICAL STUDIES, EMPIRICAL WORK, EQUILIBRIUM, EXCESS PROFITS, EXPLANATORY VARIABLE, EXPLANATORY VARIABLES, EXPORT ORIENTATION, EXPORT VOLUMES, EXPORTS, EXTERNALITIES, FAMILY BENEFITS, FINANCIAL LIBERALIZATION, FOREIGN COMPETITION, FOREIGN DIRECT INVESTMENT, FOREIGN INVESTMENTS, FOREIGN INVESTORS, GDP, GINI INDEX, GLOBAL ECONOMY, IMPACT OF TRADE, INCOME DISTRIBUTION, INCOME LEVEL, INCREASE WAGE INEQUALITY, INCREASED INEQUALITY, INCREASING FUNCTION, INCREASING WAGE, INCREASING WAGE INEQUALITY, INEQUALITY MEASURE, INEQUALITY MEASURES, INVESTMENT FLOWS, LABOR DEMAND, LABOR FORCE, LABOR MARKET, LABOR MARKETS, LIBERALIZATION, LIBERALIZATION OF TRADE, LOW INCOME, MEAN INCOMES, MEDIAN INCOME, NATURAL RESOURCES, NEGATIVE IMPACT, OBSERVED CHANGE, OIL, OPENNESS, POLICY CHANGE, POLICY CHANGES, POLICY INDICATORS, POLICY REFORMS, POLICY RESEARCH, POLICY VARIABLES, POLITICAL ECONOMY, POLITICAL ECONOMY CONSIDERATIONS, POOR COUNTRIES, POOR COUNTRY, POSITIVE RELATIONSHIP, PRODUCTIVITY, REAL WAGES, RELATIVE DEMAND, RELATIVE WAGES, RISING INEQUALITY, SKILL LEVEL, SKILL PREMIUM, SKILLED LABOR, SKILLED SECTOR, SKILLED WAGES, SKILLED WORKERS, SOCIAL TRANSFERS, TARIFF LEVELS, TARIFF RATE, TARIFF RATES, TARIFF REDUCTION, TAX REFORM, TECHNOLOGICAL CHANGE, TECHNOLOGICAL PROGRESS, TRADE, TRADE EFFECT, TRADE LIBERALIZATION, TRADE LIBERALIZATIONS, TRADE OPENNESS, TRADE POLICIES, TRADE POLICY, TRADE PROTECTION, TRADE REFORM, TRADE REFORMS, TRADE REGIME, TRADE REGIMES, TRADE VOLUMES, UNSKILLED LABOR, UNSKILLED WORKERS, VOLUME OF TRADE, WAGE CHANGES, WAGE DIFFERENTIALS, WAGE DISTRIBUTION, WAGE GAP, WAGE RATES,
Online Access:	http://documents.worldbank.org/curated/en/2005/04/5758504/tariff-liberalization-increase-wage-inequality-some-empirical-evidence https://hdl.handle.net/10986/8980
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