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Trade Protection and Inter-Industry Wages in India

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  • Puja Vasudeva Dutta

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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Bibliographic Info

Article provided by ILR Review, Cornell University, ILR School 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

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Citations

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Cited by:
  1. Du Caju, Philip & Rycx, Francois & Tojerow, Ilan, 2011. "Wage Structure Effects of International Trade: Evidence from a Small Open Economy," IZA Discussion Papers 5597, Institute for the Study of Labor (IZA).
  2. Said, Mona & Elshennawy, Abeer, 2010. "The impact of trade liberalization on manufacturing employment and wages in Egypt 1990-2007," MPRA Paper 25759, University Library of Munich, Germany.
  3. Menon, Nidhiya & Rodgers, Yana van der Meulen, 2009. "International Trade and the Gender Wage Gap: New Evidence from India's Manufacturing Sector," World Development, Elsevier, vol. 37(5), pages 965-981, May.
  4. Nathalie Chusseau & Joël Hellier, 2012. "Globalization and Inequality: Where do we stand?," Working Papers 279, ECINEQ, Society for the Study of Economic Inequality.
  5. Chamarbagwala, Rubiana, 2006. "Economic Liberalization and Wage Inequality in India," World Development, Elsevier, vol. 34(12), pages 1997-2015, December.
  6. 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.
  7. Puja Vasudeva Dutta, 2005. "Accounting for Wage Inequality in India," PRUS Working Papers 29, Poverty Research Unit at Sussex, University of Sussex.
  8. Philip Du Caju & François Rycx & Ilan Tojerow, 2012. "Wage structure effects of international trade in a small open economy: The case of Belgium," ULB Institutional Repository 2013/138896, ULB -- Universite Libre de Bruxelles.
  9. Sahoo, Amarendra & ten Raa, Thijs, 2012. "Wage–productivity differentials and Indian economic efficiency," Economic Modelling, Elsevier, vol. 29(2), pages 341-348.
  10. Bushra Yasmin, 2009. "Trade Liberalization and the Lead Role of Human Capital and Job Attributes in Wage Determination: The Case of Pakistan’s Labor Market," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 14(1), pages 1-37, Jan-Jun.

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