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Aid for Trade Flows and Wage Inequality in the Manufacturing Sector of Recipient-Countries

Author

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  • Gnangnon, Sèna Kimm

    (World Trade Organization, Switzerland)

Abstract

This study contributes to the extant literature on the effectiveness of Aid for Trade (AfT) flows in recipient-countries by examining the effect of these resource flows on wage inequality in the recipientcountries’ manufacturing sector. The analysis shows that AfT interventions help reduce wage inequality in the manufacturing sector of countries that have liberalized trade policies, enjoy greater trade openness, experience higher exports of labor-intensive manufacturing products, higher exports of low-skill-intensive manufacturing products, and greater exports of high-skill-intensive manufacturing products. Additionally, AfT interventions contribute to moderating the negative effect of export product concentration (e.g., on primary products) on wage inequality in the manufacturing sector. Finally, AfT flows reduce wage inequality in the manufacturing sector of countries that import manufacturing products (including machinery and transport equipment goods) or enjoy wider multilateral trade liberalization.

Suggested Citation

  • Gnangnon, Sèna Kimm, 2020. "Aid for Trade Flows and Wage Inequality in the Manufacturing Sector of Recipient-Countries," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 35(4), pages 643-683.
    • Handle: RePEc:ris:integr:0813
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    More about this item

    Keywords

    Aid for Trade; Wage inequality in the manufacturing sector; Developing countries;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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