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Successive Trade Liberalization and Wage Inequality

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  • Acharyya, Rajat

Abstract

This paper examines the implications of initial conditions in terms of the levels of tariff protection from which countries liberalize their trade regimes on the wage inequality in trading nations. The discussion is confined to the standard two-country Heckscher-Ohlin-Samuelson model to see whether there can be channels, other than those discussed in the recent literature, through which the observed phenomena can be theoretically predicted. The initial conditions are observed to matter in the sense that for countries lowering their tariff levels successively than once and for all, intra-country wage inequality may change asymmetrically at different stages of liberalization.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 30158.

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Date of creation: 2010
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Handle: RePEc:pra:mprapa:30158

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Related research

Keywords: Successive tariff reductions; Wage Inequality; Heckscher-Ohlin Model; Bilateral trade liberalization; Metzler paradox;

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  1. Paul Krugman, 1995. "Technology, Trade, and Factor Prices," NBER Working Papers 5355, National Bureau of Economic Research, Inc.
  2. Xu, Bin, 2003. "Trade liberalization, wage inequality, and endogenously determined nontraded goods," Journal of International Economics, Elsevier, vol. 60(2), pages 417-431, August.
  3. Ruffin, Roy J., 2003. "Oligopoly and trade: what, how much, and for whom?," Journal of International Economics, Elsevier, vol. 60(2), pages 315-335, August.
  4. Donald R. Davis, 1996. "Trade Liberalization and Income Distribution," NBER Working Papers 5693, National Bureau of Economic Research, Inc.
  5. Lloyd A. Metzler, 1949. "Tariffs, the Terms of Trade, and the Distribution of National Income," Journal of Political Economy, University of Chicago Press, vol. 57, pages 1.
  6. Sugata Marjit & Rajat Acharyya, 2006. "Trade Liberalization, Skill-linked Intermediate Production and the Two-sided Wage Gap," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 9(3), pages 203-217.
  7. Sanyal, Kalyan K, 1983. "Vertical Specialization in a Ricardian Model with a Continuum of Stages of Production," Economica, London School of Economics and Political Science, vol. 50(197), pages 71-78, February.
  8. Zhu, Susan Chun & Trefler, Daniel, 2005. "Trade and inequality in developing countries: a general equilibrium analysis," Journal of International Economics, Elsevier, vol. 65(1), pages 21-48, January.
  9. Yabuuchi, Shigemi & Chaudhuri, Sarbajit, 2009. "Skill Formation, Capital Adjustment Cost and Wage Inequality," MPRA Paper 18381, University Library of Munich, Germany.
  10. Jones, Ronald W & Engerman, Stanley L, 1996. "Trade, Technology, and Wages: A Tale of Two Countries," American Economic Review, American Economic Association, vol. 86(2), pages 35-40, May.
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