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Impact of Trade on Labour Productivity and Wage Inequality in India

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  • Hashim, Danish
  • Banga, Rashmi

Abstract

Abstract: The paper empirically estimates the impact of trade on labour productivity and wage inequality between skilled (white collar) and unskilled (blue collar) labour in Indian manufacturing. Analysis is undertaken using dynamic panel data estimations (GMM) for 58 manufacturing industries for the period 1998-99 to 2004-05. The results show that export intensity of industries has positively impacted productivity of unskilled labour while import competition has led to higher productivity of both skilled and unskilled labour. However, trade has led to increase in wage inequalities between skilled and unskilled labour implying that it has increased the wages of skilled labour more than the unskilled labour.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 35200.

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Date of creation: 2009
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Handle: RePEc:pra:mprapa:35200

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Related research

Keywords: Trade and Wage Inequality; labour productivity; wage inequality between skilled and unskilled labour; Wage Inequality; Indian manufacturing and labour productivity; Indian manufacturing and wage inequality; Labour productivity of unskilled labour;

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  1. James McDonald & Harry Bloch, 1999. "The Spillover Effects of Industrial Action on Firm Profitability," Review of Industrial Organization, Springer, vol. 15(2), pages 183-200, September.
  2. Francisco Alcalá & Antonio Ciccone, 2003. "Trade and Productivity," Working Papers 12, Barcelona Graduate School of Economics.
  3. Pravin Krishna & Devashish Mitra, . "Trade Liberalization, Market Discipline and Productivity Growth: New Evidence From India," Working Papers 96-8, Brown University, Department of Economics.
  4. Stephen Nickell & D. Nicolitsas, 1994. "Wages," LSE Research Online Documents on Economics 51644, London School of Economics and Political Science, LSE Library.
  5. Rashmi Banga, 2007. "Impact of Liberalisation on Wages and Employment in Indian Manufacturing Industries," Working Papers id:989, eSocialSciences.
  6. Rashmi Banga, 2007. "Liberalisation and Wage Inequality In India," Working Papers id:805, eSocialSciences.
  7. Durevall, Dick & Munshi, Farzana, 2006. "Trade Liberalization and Wage Inequality: Empirical Evidence from Bangladesh," Working Papers in Economics 205, University of Gothenburg, Department of Economics.
  8. Bernard, Andrew B. & Jensen, J. Bradford & Schott, Peter K., 2006. "Trade costs, firms and productivity," Journal of Monetary Economics, Elsevier, vol. 53(5), pages 917-937, July.
  9. Head, Keith & Ries, John, 2001. "Overseas Investment and Firm Exports," Review of International Economics, Wiley Blackwell, vol. 9(1), pages 108-22, February.
  10. Markusen, James R & Venables, Anthony J, 1997. "The Role of Multinational Firms in the Wage-Gap Debate," Review of International Economics, Wiley Blackwell, vol. 5(4), pages 435-51, November.
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