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Skill Premiums of Trading in International Markets and Equity: Some Lessons for Pro Poor Education Policies in Developing Countries

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  • Mamoon, Dawood

Abstract

The aim of this paper is to examine whether the human capital accumulation, that is a result of increased trade, further exacerbates industrial wage differentials. We find that level of education is one of the key determinants in explaining wage inequalities. Though countries which have a higher level of human capital do well on the inequality front, our results suggest that post liberalization human capital accumulation is associated with higher premiums to skilled labor thus increasing wage gaps. In this context, governments in developing countries may need to increase the mean level of human capital to achieve equity in labor markets.

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File URL: http://mpra.ub.uni-muenchen.de/4319/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 4319.

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Date of creation: 01 Aug 2007
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Handle: RePEc:pra:mprapa:4319

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Keywords: Integration; Trade Liberalization; Wage Inequality;

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  1. Rodrik, Dani & Subramanian, Arvind & Trebbi, Francesco, 2002. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," CEPR Discussion Papers 3643, C.E.P.R. Discussion Papers.
  2. L Alan Winters, 2004. "Trade Liberalisation and Economic Performance: An Overview," Economic Journal, Royal Economic Society, vol. 114(493), pages F4-F21, 02.
  3. Gordon H. Hanson & Ann Harrison, 1999. "Trade liberalization and wage inequality in Mexico," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 52(2), pages 271-288, January.
  4. Rose, Andrew K, 2002. "Do WTO Members have More Liberal Trade Policy?," CEPR Discussion Papers 3659, C.E.P.R. Discussion Papers.
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