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Trade Protection and Inter-Industry Wages in India

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Author Info
Puja Vasudeva Dutta

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Abstract

This paper examines the link between trade protection and industry wage premia in India using a unique dataset combining employment survey data with industry-level data for various years between 1983 and 2000. The author finds that India's trade reforms were not distributionally neutral. The impact of protection on inter-industry wage premia was positive and statistically significant, though modest in magnitude: workers employed in industries with high tariffs received higher wages than apparently identical workers in low-tariff industries. Because industries with high initial levels of protection were also those with the largest tariff reductions during this period and had the highest share of unskilled workers, the positive tariff-wage effect implies that the trade reforms likely increased wage inequality as the relative wages of the predominantly unskilled workers in these manufacturing industries fell.

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Article provided by ILR Review, ILR School, Cornell University in its journal ILR Review.

Volume (Year): 60 (2007)
Issue (Month): 2 (January)
Pages: 268-286
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Handle: RePEc:ilr:articl:v:60:y:2007:i:2:p:268-286

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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.:
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  3. John P. Haisken-DeNew & Christoph M. Schmidt, . "Inter-Industry and Inter-Region Differentials: Mechanics and Interpretation," Working Papers 9504, SELAPO Center for Human Resources. [Downloadable!]
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  21. Noel Gaston & Daniel Trefler, 1994. "Protection, trade, and wages: Evidence from U.S. manufacturing," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 47(4), pages 574-593, July.
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  25. Trost, Robert P & Lee, Lung-Fei, 1984. "Technical Training and Earnings: A Polychotomous Choice Model with Selectivity," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 151-56, February. [Downloadable!] (restricted)
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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. Puja Vasudeva Dutta, 2005. "Accounting for Wage Inequality in India," PRUS Working Papers 29, Poverty Research Unit at Sussex, University of Sussex. [Downloadable!]
  2. Badri Narayanan G, 2005. "Effects of trade liberalisation, environmental and labour regulations on employment in India's organised textile sector," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2005-005, Indira Gandhi Institute of Development Research, Mumbai, India. [Downloadable!]
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