IDEAS home Printed from https://ideas.repec.org/a/ksp/journ2/v5y2018i1p65-82.html
   My bibliography  Save this article

Skilled-unskilled wage asymmetries as an outcome of skewed international trade patterns in the South

Author

Listed:
  • Dawood MAMOON

    (World Economic Survey Expert Group, Pakistan.)

Abstract

The paper tries to find out the impact of trade liberalization on income inequality. The literature suggests that trade favors one segment of the society over other and cause uneven development. For example, one possible way through which inequality is suspected to seep into the economy through processes of liberalization is by increasing the relative wages of skilled labor as compared to the unskilled ones. Empirical evidence is provided to this effect by employing Theil Wage inequality Index and up to 28 different concepts of openness/ trade policy. OLS as well as 2SLS regressions with numerous specifications were run. It is found out that openness not only causes wage inequality but the relationship is significant for the developing countries. Additionally, the study also suggests that human capital, which is accrued from liberalization processes, is responsible for amplifying wage inequality.

Suggested Citation

  • Dawood MAMOON, 2018. "Skilled-unskilled wage asymmetries as an outcome of skewed international trade patterns in the South," Turkish Economic Review, KSP Journals, vol. 5(1), pages 65-82, March.
    • Handle: RePEc:ksp:journ2:v:5:y:2018:i:1:p:65-82
    as

    Download full text from publisher

    File URL: http://www.kspjournals.org/index.php/TER/article/download/1498/1575
    Download Restriction: no
    File URL: http://www.kspjournals.org/index.php/TER/article/view/1498
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gordon H. Hanson & Ann Harrison, 2022. "Trade Liberalization And Wage Inequality In Mexico," World Scientific Book Chapters, in: Globalization, Firms, and Workers, chapter 3, pages 43-60, World Scientific Publishing Co. Pte. Ltd..
    2. Jorge Saba Arbache & Andy Dickerson & Francis Green, 2004. "Trade Liberalisation and Wages in Developing Countries," Economic Journal, Royal Economic Society, vol. 114(493), pages 73-96, February.
    3. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 83-116.
    4. Coen Teulings & Thijs van Rens, 2008. "Education, Growth, and Income Inequality," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 89-104, February.
    5. John Cockburn, 2002. "Trade Liberalisation and Poverty in Nepal: A Computable General Equilibrium Micro Simulation Analysis," CSAE Working Paper Series 2002-11, Centre for the Study of African Economies, University of Oxford.
    6. Rose, Andrew K., 2004. "Do WTO members have more liberal trade policy?," Journal of International Economics, Elsevier, vol. 63(2), pages 209-235, July.
    7. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    8. Jean-Claude Berthélemy, 2006. "To What Extent are African Education Policies Pro-poor?," Journal of African Economies, Centre for the Study of African Economies, vol. 15(3), pages 434-469, September.
    9. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    10. Eicher, Theo S. & Garcia-Penalosa, Cecilia, 2001. "Inequality and growth: the dual role of human capital in development," Journal of Development Economics, Elsevier, vol. 66(1), pages 173-197, October.
    11. José De Gregorio & Jong-Wha Lee, 1999. "Education and Income Distribution: New Evidence from Cross-country Data," Documentos de Trabajo 55, Centro de Economía Aplicada, Universidad de Chile.
    12. Mr. Arvind Subramanian & Mr. Francesco Trebbi & Mr. Dani Rodrik, 2002. "Institutions Rule: The Primacy of Institutions over Integration and Geography in Economic Development," IMF Working Papers 2002/189, International Monetary Fund.
    13. Wood, Adrian & Ridao-Cano, Cristobal, 1999. "Skill, Trade, and International Inequality," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 89-119, January.
    14. Lofgren, Hans, 1999. "Trade reform and the poor in Morocco: a rural-urban general equilibrium analysis of reduced protection," TMD discussion papers 38, International Food Policy Research Institute (IFPRI).
    15. Jere R. Behrman & Nancy Birdsall & Miguel Székely, 2001. "Pobreza, Desigualdad, y Liberalización Comercial y financiera en América Latina," Research Department Publications 4262, Inter-American Development Bank, Research Department.
    16. Fischer, Ronald D., 2001. "The evolution of inequality after trade liberalization," Journal of Development Economics, Elsevier, vol. 66(2), pages 555-579, December.
    17. L Alan Winters, 2004. "Trade Liberalisation and Economic Performance: An Overview," Economic Journal, Royal Economic Society, vol. 114(493), pages 4-21, February.
    18. Jandhyala Tilak, 2002. "Education and Poverty," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 3(2), pages 191-207.
    19. Martin Ravallion, 2004. "The Debate on Globalization, Poverty and Inequality: why Measurement Matters," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 1, March.
    20. Pinelopi K. Goldberg & Nina Pavcnik, 2004. "Trade, Inequality, and Poverty: What Do We Know? Evidence from Recent Trade Liberalization Episodes in Developing Countries," NBER Working Papers 10593, National Bureau of Economic Research, Inc.
    21. Thomas, Vinod & Wang, Yan & Fan, Xibo, 2001. "Measuring education inequality - Gini coefficients of education," Policy Research Working Paper Series 2525, The World Bank.
    22. Jere R. Behrman & Nancy Birdsall & Miguel Székely, 2001. "Pobreza, Desigualdad, y Liberalización Comercial y financiera en América Latina," Research Department Publications 4262, Inter-American Development Bank, Research Department.
    23. David Dollar & Aart Kraay, 2004. "Trade, Growth, and Poverty," Economic Journal, Royal Economic Society, vol. 114(493), pages 22-49, February.
    24. Amparo Castello & Rafael Domenech, 2002. "Human Capital Inequality and Economic Growth: Some New Evidence," Economic Journal, Royal Economic Society, vol. 112(478), pages 187-200, March.
    25. L. Alan Winters, 2000. "Trade Liberalisation and Poverty," PRUS Working Papers 07, Poverty Research Unit at Sussex, University of Sussex.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dawood Mamoon & Syed Mansoob Murshed, 2013. "Education bias of trade liberalization and wage inequality in developing countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(4), pages 572-604, June.
    2. Dawood Mamoon, 2015. "How May International Trade affect Poverty in a Developing Country Setup? The Inequality Channel," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(5), pages 230-244, May.
    3. Mamoon, Dawood & Murshed, S. Mansoob, 2011. "Labour Markets, Education and Duality of Returns," MPRA Paper 29529, University Library of Munich, Germany.
    4. Dawood Mamoon, 2011. "Relative Factor Return Gaps in Labour Markets and Global Integration," Economics Bulletin, AccessEcon, vol. 31(1), pages 969-988.
    5. Dawood MAMOON, 2018. "Globalization, political orientation and wage inequality: From Donald Trump’s election to Angela Merkal’s re-election," Turkish Economic Review, KSP Journals, vol. 5(1), pages 12-21, March.
    6. Mamoon, Dawood, 2007. "Skill Premiums of Trading in International Markets and Equity: Some Lessons for Pro Poor Education Policies in Developing Countries," MPRA Paper 4319, University Library of Munich, Germany.
    7. Grabiella Berloffa & Maria Luigia Segnana, 2004. "Trade, inequality and pro-poor growth: Two perspectives, one message?," Department of Economics Working Papers 0408, Department of Economics, University of Trento, Italia.
    8. Mamoon, Dawood & Murshed, S. Mansoob, 2008. "Unequal skill premiums and trade liberalization: Is education the missing link?," Economics Letters, Elsevier, vol. 100(2), pages 262-266, August.
    9. Vatcharin Sirimaneetham, 2006. "What drives liberal policies in developing countries?," Bristol Economics Discussion Papers 06/587, School of Economics, University of Bristol, UK.
    10. Remco H. Oostendorp, 2009. "Globalization and the Gender Wage Gap," The World Bank Economic Review, World Bank, vol. 23(1), pages 141-161, January.
    11. Dawood Mamoon, 2006. "Which Institutions Are More Relevant Than Others in Inequality Mitigation?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(4), pages 893-912.
    12. Adrian Wood, 2004. "Making globalization work for the poor: the 2000 White Paper reconsidered," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(7), pages 933-937.
    13. Andrea F. Presbitero, 2006. "Institutions and geography as sources of economic development," Journal of International Development, John Wiley & Sons, Ltd., vol. 18(3), pages 351-378.
    14. Mamoon, Dawood, 2017. "Why International Trade Cause Inequality in Developing Countries," MPRA Paper 82268, University Library of Munich, Germany.
    15. Dawood Mamoon & S. Mansoob Murshed, 2017. "When Education Explains Strong Institutions: Trade Policy also Matters," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 131(3), pages 1179-1210, April.
    16. Lederman, Daniel & Saenz, Laura, 2005. "Innovation and development around the world, 1960-2000," Policy Research Working Paper Series 3774, The World Bank.
    17. Ahmet Faruk Aysan & …mer Faruk Baykal & Marie-Ange Véganzonès–Varoudakis, 2011. "The Effects of Convergence in Governance on Capital Accumulation in the Black Sea Economic Cooperation Countries," Chapters, in: Mehmet Ugur & David Sunderland (ed.), Does Economic Governance Matter?, chapter 6, Edward Elgar Publishing.
    18. Fetzer, James J. & Rivera, Sandra A., 2005. "Modeling Modifications in Rules of Origin: A Partial Equilibrium Approach," Conference papers 331372, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    19. Ahmet Faruk AYSAN & Mustapha Kamel NABLI & Marie‐Ange VÉGANZONÈS‐VAROUDAKIS, 2007. "Governance Institutions And Private Investment: An Application To The Middle East And North Africa," The Developing Economies, Institute of Developing Economies, vol. 45(3), pages 339-377, September.
    20. Grimm, Michael & Klasen, Stephan, 2007. "Geography vs. Institutions at the Village Level," Proceedings of the German Development Economics Conference, Göttingen 2007 9, Verein für Socialpolitik, Research Committee Development Economics.

    More about this item

    Keywords

    Wages; International trade; Asymmetries.;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ksp:journ2:v:5:y:2018:i:1:p:65-82. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bilal KARGI (email available below). General contact details of provider: http://www.kspjournals.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.