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Does openness reduce wage inequality in developing countries? A panel data analysis

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Author Info
Munshi, Farzana () (Department of Economics, School of Business, Economics and Law, Göteborg University)
Abstract

This paper provides panel data evidence on trade liberalization and wage inequality in Bangladesh. Using several standard econometric models, wage equations for skilled and unskilled workers in the formal manufacturing sector are estimated for the 1975-2002 period. The results, particularly the estimates from a dynamic fixed effects model, provide some weak evidence that openness contributes to a reduction in wage inequality between skilled and unskilled workers. The results also indicate that real wages of both unskilled and skilled workers increased during the period.

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File URL: http://hdl.handle.net/2077/2665
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Publisher Info
Paper provided by Göteborg University, Department of Economics in its series Working Papers in Economics with number 241.

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Length: 26 pages
Date of creation: 14 Dec 2006
Date of revision: 06 Feb 2008
Handle: RePEc:hhs:gunwpe:0241

Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, Göteborg University Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Related research
Keywords: Bangladesh; openness; wage inequality; panel data; panel unit root; dynamic model;

Find related papers by JEL classification:
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
F15 - International Economics - - Trade - - - Economic Integration
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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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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    Other versions:
  2. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Blackwell Publishing, vol. 58(2), pages 277-97, April. [Downloadable!] (restricted)
  3. Durevall, Dick & Munshi, Farzana, 2006. "Trade Liberalization and Wage Inequality: Empirical Evidence from Bangladesh," Working Papers in Economics 205, Göteborg University, Department of Economics. [Downloadable!]
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    Other versions:
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    Other versions:
  7. Revenga, Ana, 1995. "Employment and wage effects of trade liberalization : the case of Mexican manufacturing," Policy Research Working Paper Series 1524, The World Bank. [Downloadable!]
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  11. Feenstra, R.C. & Hanson, G.H., 1995. "Foreign Investment, Outsourcing and Relative Wages," Papers 95-14, California Davis - Institute of Governmental Affairs.
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  12. Galiani, Sebastian & Sanguinetti, Pablo, 2003. "The impact of trade liberalization on wage inequality: evidence from Argentina," Journal of Development Economics, Elsevier, vol. 72(2), pages 497-513, December. [Downloadable!] (restricted)
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  13. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, vol. 46(6), pages 1251-71, November. [Downloadable!] (restricted)
  14. Athukorala, Prema-chandra & Rajapatirana, Sarath, 2000. "Liberalization and Industrial Transformation: Lessons from the Sri Lankan Experience," Economic Development and Cultural Change, University of Chicago Press, vol. 48(3), pages 543-72, April.
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  16. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May. [Downloadable!] (restricted)
    Other versions:
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