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The Impact of Trade Liberalization on Wage Inequality: Evidence from Argentina

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  • Sebastian Galiani

    ()
    (Department of Economics, Universidad de San Andres)

  • Pablo Sanguinetti

    (Universidad Torcuato Di Tella)

Abstract

Wage inequality in Argentina greatly increased during the nineties. During this period, a rapid and deep process of trade liberalization was implemented. In this paper we study whether trade liberalization played any role in shaping the Argentine wage structure during the nineties. Specifically, we test whether those sectors where import penetration deepened are also the sectors where, ceteris paribus, a higher increase in wage inequality is observed. Even though we find some evidence that supports this hypothesis, as has been found for some developed economies, trade deepening can only explain a relatively small proportion of the observed rise in wage inequality.

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Bibliographic Info

Paper provided by Universidad de San Andres, Departamento de Economia in its series Working Papers with number 65.

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Date of creation: Oct 2003
Date of revision: Oct 2003
Publication status: Published in Journal of Development Economics, Vol 72, 2003, pages 497-513
Handle: RePEc:sad:wpaper:65

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Keywords: trade liberalization; wage; inequality; Argentina;

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References

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  1. Machin, Stephen, 1996. "Wage Inequality in the UK," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 12(1), pages 47-64, Spring.
  2. Robert C. Feenstra, . "Integration Of Trade And Disintegration Of Production In The Global Economy," Department of Economics, California Davis - Department of Economics 98-06, California Davis - Department of Economics.
  3. Sebasti=E1n Galiani & Hugo A. Hopenhayn, 2001. "Duration and Risk of Unemployment in Argentina," Labor and Demography, EconWPA 0012002, EconWPA.
  4. Stephen Machin, 1995. "Changes in the Relative Demand for Skills in the UK Labour Market," CEP Discussion Papers dp0221, Centre for Economic Performance, LSE.
  5. Mary E. Lovely & J. David Richardson, 1998. "Trade Flows and Wage Premiums: Does Who or What Matter?," NBER Working Papers 6668, National Bureau of Economic Research, Inc.
  6. Edward E. Leamer, 1994. "Trade, Wages and Revolving Door Ideas," NBER Working Papers 4716, National Bureau of Economic Research, Inc.
  7. Bound, John & Johnson, George, 1992. "Changes in the Structure of Wages in the 1980's: An Evaluation of Alternative Explanations," American Economic Review, American Economic Association, American Economic Association, vol. 82(3), pages 371-92, June.
  8. Adrian Wood, 1995. "How Trade Hurt Unskilled Workers," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 9(3), pages 57-80, Summer.
  9. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, Elsevier, vol. 32(3), pages 385-397, August.
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