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The Manufacturing Wage Inequality in Latin America and East Asia: Openness, Technology Transfer, and Labor Supply

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  • Antonio Avalos
  • Andreas Savvides

Abstract

This paper examines wage inequality in the manufacturing sector for a panel of Latin American and East Asian economies during the last three decades. A labor supply and demand model is presented where three main determinants of wage inequality are investigated: trade openness, technology transfer, and labor supply. Findings indicate that wage inequality in the two regions has responded differently to the various determinants enumerated above. Some lessons from the comparative experience of the two regions are drawn.

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  • Antonio Avalos & Andreas Savvides, 2006. "The Manufacturing Wage Inequality in Latin America and East Asia: Openness, Technology Transfer, and Labor Supply," Review of Development Economics, Wiley Blackwell, vol. 10(4), pages 553-576, November.
    • Handle: RePEc:bla:rdevec:v:10:y:2006:i:4:p:553-576
    DOI: 10.1111/j.1467-9361.2006.00330.x
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    Cited by:

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    2. Rossana Patron & Marcel Vaillant, 2012. "Can Education Policy Address The Wage Gap? A Note On Public Skill Formation In Developing Countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 24(3), pages 369-378, April.
    3. Havranek, Tomas & Irsova, Zuzana & Laslopova, Lubica & Zeynalova, Olesia, 2020. "Skilled and Unskilled Labor Are Less Substitutable than Commonly Thought," EconStor Preprints 223060, ZBW - Leibniz Information Centre for Economics.
    4. Alberto Posso, 2013. "Enter the Dragon: Have Imports from China Hurt Wages in Manufacturing?," Asian Economic Journal, East Asian Economic Association, vol. 27(3), pages 307-321, September.
    5. Ferroni, Marco & Mateo, Mercedes & Payne, Mark, 2008. "Development under conditions of inequality and distrust: Social cohesion in Latin America," IFPRI discussion papers 777, International Food Policy Research Institute (IFPRI).
    6. Afonso, Oscar & Neves, Pedro Cunha & Thompson, Maria, 2016. "The skill premium and economic growth with costly investment, complementarities and international trade of intermediate goods," Japan and the World Economy, Elsevier, vol. 37, pages 73-86.
    7. Huang, Kaixing & Yan, Wenshou & Sim, Nicholas & Guo, Yuqing & Xie, Fang, 2022. "Can trade explain the rising trends in income inequality? Insights from 40 years of empirical studies," Economic Modelling, Elsevier, vol. 107(C).
    8. Marco Ferroni & Mercedes Mateo Díaz & J. Mark Payne, 2007. "Development under Conditions of Inequality and Distrust: An Exploration of the Role of Social Capital and Social Cohesion in Latin America," IDB Publications (Working Papers) 53818, Inter-American Development Bank.
    9. Vicente German-Soto & Luis Gutiérrez Flores, 2010. "Time Series Tests of Structural Change among Innovation and Trade Liberalization in Mexico," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 1(3), pages 219-237, September.
    10. Bruno Martorano & Donghyun Park & Marco Sanfilippo, 2017. "Catching-up, structural transformation, and inequality: industry-level evidence from Asia," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 26(4), pages 555-570.
    11. Havranek, Tomas & Irsova, Zuzana & Laslopova, Lubica & Zeynalova, Olesia, 2020. "The Elasticity of Substitution between Skilled and Unskilled Labor: A Meta-Analysis," MPRA Paper 102598, University Library of Munich, Germany.
    12. Afonso, Oscar & Leite, Rui, 2010. "Learning-by-doing, technology-adoption costs and wage inequality," Economic Modelling, Elsevier, vol. 27(5), pages 1069-1078, September.
    13. International Monetary Fund, 2008. "Namibia: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2008/082, International Monetary Fund.
    14. Afonso, Oscar, 2013. "Diffusion and directed technological knowledge, human capital and wages," Economic Modelling, Elsevier, vol. 31(C), pages 370-382.
    15. Hyunchul Lee & Kyungtag Lee & Jong Ha Lee, 2021. "The Various Effects of Technology Trade on the Sustainable Market Value of Firms in OECD Countries," Sustainability, MDPI, vol. 13(22), pages 1-20, November.
    16. Afonso, Oscar & Bandeira, Ana Maria, 2013. "Effects Of International Diffusion Of A General Purpose Technology On Wage Inequality," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 54(2), pages 203-220, December.
    17. Afonso, Oscar & Gil, Pedro Mazeda, 2013. "Effects of North–South trade on wage inequality and on human-capital accumulation," Economic Modelling, Elsevier, vol. 35(C), pages 481-492.
    18. Maurício Benegas & Márcio Veras Corrêa, 2017. "(Un)equal Educational Opportunities and the Labor Market: A Theoretical Analysis," LABOUR, CEIS, vol. 31(4), pages 433-456, December.
    19. Maurício Benegas & Márcio Veras Corrêa, 2020. "Educational supply policies: distortions and labor market performance," Journal of Economics, Springer, vol. 129(3), pages 203-239, April.
    20. Jiancai Pi & Yu Zhou, 2015. "The impacts of corruption on wage inequality and rural–urban migration in developing countries," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(3), pages 753-768, May.
    21. Li, Huijuan & Cai, Weihong & Li, Wenxiu, 2021. "Does global value chains participation improve skill premium? Mediating role of skill-biased technological change," Economic Modelling, Elsevier, vol. 99(C).
    22. Chiara Binelli, 2008. "Returns to Education and Increasing Wage Inequality in Latin America," Working Paper series 30_08, Rimini Centre for Economic Analysis.
    23. Koh, Sharon G. M. & Lee, Grace H. Y. & Siah, Audrey K. L., 2022. "The Resurgence of Income Inequality in Asia-Pacific: The Role of Trade Openness, Educational Attainment and Institutional Quality," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 56(3), pages 11-27.
    24. Jayanthakumaran, Kankesu & Sangkaew, Piyapong & O’Brien, Martin, 2013. "Trade liberalisation and manufacturing wage premiums: Evidence from Thailand," Journal of Asian Economics, Elsevier, vol. 29(C), pages 15-23.

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