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