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Trade boom and wage inequality: evidence from Ugandan districts

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  • Massimiliano Calì

Abstract

The process of economic integration over the past two decades has been accompanied by expanding skilled wage premia—a key measure of wage inequality—in most countries. This was also the case for Ugandan wage employees during the 1990s, a period of abrupt trade opening, market reforms and improved relations with neighbouring Kenya. As in other unskilled labour abundant countries, this is a surprising result in light of the standard Heckscher–Ohlin (H–O) framework. By using a novel district-level analysis, I find that in fact increased trade reduced wage inequality in line with the H–O predictions. During the 1990s districts more exposed to the trade boom experienced a rise in wage premia 2.8 percentage points lower relative to less-exposed districts. On the other hand, the intensification of domestic trade across districts and the increase in average education were associated with increased wage premia during the period of analysis.

Suggested Citation

  • Massimiliano Calì, 2014. "Trade boom and wage inequality: evidence from Ugandan districts," Journal of Economic Geography, Oxford University Press, vol. 14(6), pages 1141-1174.
    • Handle: RePEc:oup:jecgeo:v:14:y:2014:i:6:p:1141-1174.
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    File URL: http://hdl.handle.net/10.1093/jeg/lbu001
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    Cited by:

    1. Cali,Massimiliano & Hollweg,Claire Honore & Ruppert Bulmer,Elizabeth N., 2015. "Seeking shared prosperity through trade," Policy Research Working Paper Series 7314, The World Bank.
    2. Cali, Massimiliano & Farole, Thomas & Kunaka, Charles & Wagle, Swarnim, 2014. "Integrating border regions : connectivity and competitiveness in South Asia," Policy Research Working Paper Series 6987, The World Bank.

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