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Does Tariff Liberalization Increase Wage Inequality? Some Empirical Evidence

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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.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11046.

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Date of creation: Jan 2005
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Publication status: published as Branko Milanovic, Lyn Squire. "Does Tariff Liberalization Increase Wage Inequality? Some Empirical Evidence," in Ann Harrison, editor, "Globalization and Poverty" University of Chicago Press (2007)
Handle: RePEc:nbr:nberwo:11046

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Citations

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Cited by:
  1. Cagatay Bircan & Tilman Brück & Marc Vothknecht, 2010. "Violent Conflict and Inequality," HiCN Working Papers 77, Households in Conflict Network.
  2. repec:idb:brikps:72378 is not listed on IDEAS
  3. Limao, Nuno & Panagariya, Arvind, 2007. "Inequality and endogenous trade policy outcomes," Journal of International Economics, Elsevier, vol. 72(2), pages 292-309, July.
  4. Ann Harrison, 2006. "Globalization and Poverty," NBER Working Papers 12347, National Bureau of Economic Research, Inc.
  5. Ann Harrison & Margaret McMillan, 2007. "On the links between globalization and poverty," Journal of Economic Inequality, Springer, vol. 5(1), pages 123-134, April.
  6. Nancy Birdsall, 2006. "Stormy Days on an Open Field: Asymmetries in the Global Economy," Working Papers 81, Center for Global Development.
  7. Pranab Bardhan, 2006. "Globalization, Inequality, and Poverty," IDB Publications 9126, Inter-American Development Bank.
  8. Spinesi, Luca, 2009. "Rent-seeking bureaucracies, inequality, and growth," Journal of Development Economics, Elsevier, vol. 90(2), pages 244-257, November.
  9. 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.
  10. 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.
  11. Meschi, Elena & Vivarelli, Marco, 2007. "Globalization and Income Inequality," IZA Discussion Papers 2958, Institute for the Study of Labor (IZA).
  12. 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.
  13. 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.
  14. Hisako Kai & Shigeyuki Hamori, 2009. "Globalization, financial depth, and inequality in Sub-Saharan Africa," Economics Bulletin, AccessEcon, vol. 29(3), pages 2025-2037.
  15. Meschi, Elena & Vivarelli, Marco, 2009. "Trade and Income Inequality in Developing Countries," World Development, Elsevier, vol. 37(2), pages 287-302, February.

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