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Does tariff liberalization increase wage inequality ? - Some empirical evidence

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  • Milanovic, Branko
  • Squire, Lyn

Abstract

The objective of the paper is to answer an often asked question: If tariff rates are reduced, what will happen to wage inequality? The authors consider two types of wage inequality: between occupations (skills premium) and between industries. They use two large databases of wage inequality that have recently become available and a large data set of average tariff rates covering the period between 1980 and 2000. The authors find that tariff reduction is associated with higher inter-occupational and inter-industry inequality in poorer countries (those below the world median income) and the reverse in richer countries. However, the results for inter-occupational inequality must be treated with caution.

Suggested Citation

  • Milanovic, Branko & Squire, Lyn, 2005. "Does tariff liberalization increase wage inequality ? - Some empirical evidence," Policy Research Working Paper Series 3571, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3571
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    More about this item

    Keywords

    Inequality; Environmental Economics&Policies; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Poverty Impact Evaluation; Economic Theory&Research;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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