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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.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3571.

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Date of creation: 01 Apr 2005
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Handle: RePEc:wbk:wbrwps:3571

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Keywords: Inequality; Environmental Economics&Policies; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Poverty Impact Evaluation; Economic Theory&Research;

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References

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  1. Revenga, Ana, 1997. "Employment and Wage Effects of Trade Liberalization: The Case of Mexican Manufacturing," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages S20-43, July.
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Citations

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Cited by:
  1. Cagatay Bircan & Tilman Brück & Marc Vothknecht, 2010. "Violent Conflict and Inequality," Discussion Papers of DIW Berlin 1013, DIW Berlin, German Institute for Economic Research.
  2. Hisako KAI & Shigeyuki HAMORI, 2009. "Globalization, Financial Depth, and Inequality in Sub-Saharan Africa," Discussion Papers 0912, Graduate School of Economics, Kobe University.
  3. Spinesi, Luca, 2009. "Rent-seeking bureaucracies, inequality, and growth," Journal of Development Economics, Elsevier, vol. 90(2), pages 244-257, November.
  4. Limao, Nuno & Panagariya, Arvind, 2007. "Inequality and endogenous trade policy outcomes," Journal of International Economics, Elsevier, vol. 72(2), pages 292-309, July.
  5. repec:idb:brikps:72378 is not listed on IDEAS
  6. Tausch, Arno, 2009. "Ist die Globalisierung fit für das soziale Europa?
    [Is Globalization fit for Social Europe?]
    ," MPRA Paper 14264, University Library of Munich, Germany.
  7. Ann Harrison, 2006. "Globalization and Poverty," NBER Working Papers 12347, National Bureau of Economic Research, Inc.
  8. Ann Harrison & Margaret McMillan, 2007. "On the links between globalization and poverty," Journal of Economic Inequality, Springer, vol. 5(1), pages 123-134, April.
  9. Munshi, Farzana, 2008. "Globalization and Inter-occupational Inequality in a Panel of Countries: 1983-2003," Working Papers in Economics 302, University of Gothenburg, Department of Economics.
  10. Birdsall, Nancy, 2006. "Stormy Days on an Open Field: Asymmetries in the Global Economy," Working Paper Series RP2006/31, World Institute for Development Economic Research (UNU-WIDER).
  11. McCleery, Robert K. & De Paolis, Fernando, 2008. "The Washington Consensus: A post-mortem," Journal of Asian Economics, Elsevier, vol. 19(5-6), pages 438-446.
  12. Meschi, Elena & Vivarelli, Marco, 2007. "Globalization and Income Inequality," IZA Discussion Papers 2958, Institute for the Study of Labor (IZA).
  13. Hamori, Shigeyuki & Hashiguchi, Yoshihiro, 2012. "The effect of financial deepening on inequality: Some international evidence," Journal of Asian Economics, Elsevier, vol. 23(4), pages 353-359.
  14. Meschi, Elena & Vivarelli, Marco, 2009. "Trade and Income Inequality in Developing Countries," World Development, Elsevier, vol. 37(2), pages 287-302, February.
  15. Pranab Bardhan, 2006. "Globalization, Inequality, and Poverty," IDB Publications 9126, Inter-American Development Bank.

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