Relative Factor Return Gaps in Labour Markets and Global Integration
AbstractWe estimate the role of openness and integration in welfare generation in a cross country framework. Once controlling for institutions, openness is generally associated with increased wage inequalities across nations. However the results for trade policy are mixed. Decrease in import taxes increase wage inequality, whereas decrease in export taxes has an egalitarian effect. The results are applicable only to the larger sample of developed and developing countries. If the sample is restricted to developing countries, protection by means of export and import taxes is good for unskilled workers as higher trade taxes seem to put a downward pressure on the wage gaps between skilled and unskilled. The results highlight the bottle neck faced by both developing and developed countries in WTO talks which have not been successful as yet in terms of further decrease in trade taxes. In case this situation prevails, the paper calls for more South-South trade which would enable developing countries to decrease the relative wage gaps among their labour force.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 3045.
Date of creation: May 2007
Date of revision:
International Trade; Redistribution; Inequality; Cross Section Models;
Other versions of this item:
- Dawood Mamoon, 2011. "Relative Factor Return Gaps in Labour Markets and Global Integration," Economics Bulletin, AccessEcon, vol. 31(1), pages 969-988.
- F15 - International Economics - - Trade - - - Economic Integration
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-05-12 (All new papers)
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