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Trade Liberalization and the Wage Skill Premium: Evidence from Indonesia

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  • Amiti, Mary
  • Cameron, Lisa

Abstract

In this paper, we analyze the effect of reducing import tariffs on intermediate inputs and final goods on the wage skill premium within firms in Indonesia – a country with a high share of unskilled workers. We present a new finding that reducing input tariffs reduces the wage skill premium within firms that import their intermediate inputs. However, we do not find significant effects from reducing tariffs on final goods on the wage skill premium within firms.

Suggested Citation

  • Amiti, Mary & Cameron, Lisa, 2012. "Trade Liberalization and the Wage Skill Premium: Evidence from Indonesia," Journal of International Economics, Elsevier, vol. 87(2), pages 277-287.
  • Handle: RePEc:eee:inecon:v:87:y:2012:i:2:p:277-287
    DOI: 10.1016/j.jinteco.2012.01.009
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    More about this item

    Keywords

    wage inequality; skill premium; import tariffs; intermediate inputs;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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