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Does Tariff Liberalization Increase Wage Inequality? Some Empirical Evidence

In: Globalization and Poverty

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  • Branko Milanovic
  • Lyn Squire

Abstract

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

(This abstract was borrowed from another version of this item.)

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This chapter was published in:

  • Ann Harrison, 2007. "Globalization and Poverty," NBER Books, National Bureau of Economic Research, Inc, number harr06-1, October.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 0118.

    Handle: RePEc:nbr:nberch:0118

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    Cited by:
    1. McCleery, Robert K. & De Paolis, Fernando, 2008. "The Washington Consensus: A post-mortem," Journal of Asian Economics, Elsevier, vol. 19(5-6), pages 438-446.
    2. Birdsall, Nancy, 2006. "Stormy Days on an Open Field: Asymmetries in the Global Economy," Working Paper Series RP2006/31, World Institute for Development Economic Research (UNU-WIDER).
    3. Munshi, Farzana, 2008. "Globalization and Inter-occupational Inequality in a Panel of Countries: 1983-2003," Working Papers in Economics 302, University of Gothenburg, Department of Economics.
    4. Ann Harrison, 2007. "Globalization and Poverty," NBER Books, National Bureau of Economic Research, Inc, number harr06-1, October.
    5. Pranab Bardhan, 2006. "Globalization, Inequality, and Poverty," IDB Publications 9126, Inter-American Development Bank.
    6. Meschi, Elena & Vivarelli, Marco, 2009. "Trade and Income Inequality in Developing Countries," World Development, Elsevier, vol. 37(2), pages 287-302, February.
    7. Hamori, Shigeyuki & Hashiguchi, Yoshihiro, 2012. "The effect of financial deepening on inequality: Some international evidence," Journal of Asian Economics, Elsevier, vol. 23(4), pages 353-359.
    8. Meschi, Elena & Vivarelli, Marco, 2007. "Globalization and Income Inequality," IZA Discussion Papers 2958, Institute for the Study of Labor (IZA).
    9. Limao, Nuno & Panagariya, Arvind, 2007. "Inequality and endogenous trade policy outcomes," Journal of International Economics, Elsevier, vol. 72(2), pages 292-309, July.
    10. Bircan, Cagatay & Brück, Tilman & Vothknecht, Marc, 2010. "Violent Conflict and Inequality," IZA Discussion Papers 4990, Institute for the Study of Labor (IZA).
    11. Spinesi, Luca, 2009. "Rent-seeking bureaucracies, inequality, and growth," Journal of Development Economics, Elsevier, vol. 90(2), pages 244-257, November.
    12. Hisako KAI & Shigeyuki HAMORI, 2009. "Globalization, Financial Depth, and Inequality in Sub-Saharan Africa," Discussion Papers 0912, Graduate School of Economics, Kobe University.
    13. Ann Harrison & Margaret McMillan, 2007. "On the links between globalization and poverty," Journal of Economic Inequality, Springer, vol. 5(1), pages 123-134, April.
    14. Tausch, Arno, 2009. "Ist die Globalisierung fit für das soziale Europa?
      [Is Globalization fit for Social Europe?]
      ," MPRA Paper 14264, University Library of Munich, Germany.
    15. repec:idb:brikps:72378 is not listed on IDEAS

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