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Does tariff liberalization increase wage inequality? Some empirical evidence

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Author Info

  • Branko Milanovic

    (Carnegie Endowment/World Bank)

  • Lyn Squire

    (Global Development Network)

Abstract

The objective of the paper is to answer an often-asked question : if tariff rates are reduced, what will happen to wage inequality ? We consider two types of wage inequality : between occupations (skills premium), and between industries. We use two large data bases of wage inequality that have become recently available and a large dataset of average tariff rates all covering the period between 1980 and 2000. We 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. The results for inter-occupational inequality though must be treated with caution.

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File URL: http://128.118.178.162/eps/it/papers/0502/0502012.pdf
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Bibliographic Info

Paper provided by EconWPA in its series International Trade with number 0502012.

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Length: 64 pages
Date of creation: 11 Feb 2005
Date of revision:
Handle: RePEc:wpa:wuwpit:0502012

Note: Type of Document - pdf; pages: 64
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Web page: http://128.118.178.162

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Keywords: tariffs; trade; liberalization; wages; inequality;

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References

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Citations

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Cited by:
  1. Hisako Kai & Shigeyuki Hamori, 2009. "Globalization, financial depth, and inequality in Sub-Saharan Africa," Economics Bulletin, AccessEcon, vol. 29(3), pages 2025-2037.
  2. Cagatay Bircan & Tilman Brück & Marc Vothknecht, 2010. "Violent conflict and inequality," Brooks World Poverty Institute Working Paper Series 12910, BWPI, The University of Manchester.
  3. Pranab Bardhan, 2006. "Globalization, Inequality, and Poverty," IDB Publications 9126, Inter-American Development Bank.
  4. Meschi, Elena & Vivarelli, Marco, 2007. "Globalization and Income Inequality," IZA Discussion Papers 2958, Institute for the Study of Labor (IZA).
  5. 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.
  6. 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.
  7. Ann Harrison, 2006. "Globalization and Poverty," NBER Working Papers 12347, National Bureau of Economic Research, Inc.
  8. repec:idb:brikps:72378 is not listed on IDEAS
  9. Meschi, Elena & Vivarelli, Marco, 2009. "Trade and Income Inequality in Developing Countries," World Development, Elsevier, vol. 37(2), pages 287-302, February.
  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. Ann Harrison & Margaret McMillan, 2007. "On the links between globalization and poverty," Journal of Economic Inequality, Springer, vol. 5(1), pages 123-134, April.
  12. 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.
  13. Spinesi, Luca, 2009. "Rent-seeking bureaucracies, inequality, and growth," Journal of Development Economics, Elsevier, vol. 90(2), pages 244-257, November.
  14. Limao, Nuno & Panagariya, Arvind, 2007. "Inequality and endogenous trade policy outcomes," Journal of International Economics, Elsevier, vol. 72(2), pages 292-309, July.
  15. 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.
  16. Guillermo E. Perry & Omar S. Arias & J. Humberto López & William F. Maloney & Luis Servén, 2006. "Poverty Reduction and Growth : Virtuous and Vicious Circles," World Bank Publications, The World Bank, number 6997, July.

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