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Trade and Workers: Evidence from the Philippines

  • Rana Hasan

    ()

    (Asian Development Bank)

  • Lan Chen

    ()

    (Graduate student, University of Hawaii-Manoa)

We combine labor force survey data with trade and production data to examine the impact of trade on wages and employment in the Philippines' manufacturing section. Our main finding are as follows. First, in contrast to findings typically reported for Latin American countries, our data indicate that wage inequality in the Philippines' manufacturing sector has declined over the period in which trade liberalization has been undertaken. This is despite the fact that reductions in tariff rates were largest in less skill intensive manufacturing industries. There has also been an absence of any secular rise in returns to higher education. Second, tariff reductions have been associated with declines in industry wage premiums in capital-intensive industries. Moreover, these declines appear to have been largest for skilled workers. Finally, tariff reductions have had an insignificant effect on both employment as well as the average hours of work of full-time employees across industries. These findings are consistent with a scenario where workers in capital-intensive industries, especially the more skilled ones, earned rents prior to trade liberalization; liberalization may have worked to erode these.

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Paper provided by East-West Center, Economics Study Area in its series Economics Study Area Working Papers with number 61.

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Length: 40 pages
Date of creation: Sep 2003
Date of revision:
Handle: RePEc:ewc:wpaper:wp61
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  1. Gene M. Grossman, 1982. "International Competition and the Unionized Sector," NBER Working Papers 0899, National Bureau of Economic Research, Inc.
  2. Uma Karmbhampati & Pravin Krishna & Devashish Mitra, 1997. "The effect of trade policy reforms on labour markets: evidence from India," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 6(2), pages 287-297.
  3. Noel Gaston & Daniel Trefler, 1994. "Protection, Trade, and Wages: Evidence from U.S. Manufacturing," ILR Review, Cornell University, ILR School, vol. 47(4), pages 574-593, July.
  4. Medalla, Erlinda M., 1990. "An Assessment of Trade and Industrial Policy, 1986-1988," Working Papers WP 1990-07, Philippine Institute for Development Studies.
  5. Pinelopi K. Goldberg & Nina Pavcnik, 2001. "Trade Protection and Wages: Evidence from the Colombian Trade Reforms," NBER Working Papers 8575, National Bureau of Economic Research, Inc.
  6. Gaston, Noel & Trefler, Daniel, 1995. "Union wage sensitivity to trade and protection: Theory and evidence," Journal of International Economics, Elsevier, vol. 39(1-2), pages 1-25, August.
  7. Harrison, Ann & Hanson, Gordon, 1999. "Who gains from trade reform? Some remaining puzzles," Journal of Development Economics, Elsevier, vol. 59(1), pages 125-154, June.
  8. World Bank, 2000. "Philippines - Growth with Equity : The Remaining Agenda - A World Bank Social and Structural Review," World Bank Other Operational Studies 15142, The World Bank.
  9. Currie, Janet & Harrison, Ann E, 1997. "Sharing the Costs: The Impact of Trade Reform on Capital and Labor in Morocco," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages S44-71, July.
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