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Trade and Wage Inequality in Developing Countries: South-South Trade Matter

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  • Julien Gourdon

    (CERDI - Centre d'études et de recherches sur le developpement international - CNRS - Université d'Auvergne - Clermont-Ferrand I)

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    Abstract

    The relationship between trade liberalization and inequality has received considerable attention in recent years. The primary purpose of this paper is to present new results on the sources of wage inequalities in manufacturing taking into account South-South (S-S) trade. Globalization not only leads to increasing North-South (N-S) trade, but the direction and composition of trade has also changed. More trade is carried out between developing countries. We observe increasing wage inequality is more due to the South-South trade liberalization than to the classical trade liberalization with northern countries. The second purpose is to elucidate the link between the direction of trade and technological change, arguing that it might explain why we obtain different results for South-South trade and North-South trade on wage inequality. A part of this increasing wage inequality due to S-S trade comes from the development of N-S trade relationship in S-S trade which increases wage inequality in middle income developing countries. However the fact that S-S trade is more skill intensive sector oriented increase wage inequality for all developing countries.

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    Date of creation: 18 Jan 2011
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    Handle: RePEc:hal:wpaper:halshs-00557113
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    Keywords: international trade; Wage Inequality; Skill-biased technical change;

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    Find related papers by JEL classification:
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • F1 - International Economics - - Trade

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    Cited by:

    1. Alberto Behar, 2013. "The Endogenous Skill Bias of Technical Change and Inequality in Developing Countries," IMF Working Papers 13/50, International Monetary Fund.
    2. Meltem Ucal & Mehmet Hüseyin Bilgin & Alfred Haug, 2014. ": Income Inequality and FDI: Evidence with Turkish Data," Working Papers 1407, University of Otago, Department of Economics, revised Jun 2014.
    3. Ucal, Meltem & Bilgin, Mehmet Huseyin, 2009. "Income Inequality and FDI in Turkey: FM-OLS (Phillips-Hansen) Estimation and ARDL Approach to Cointegration," MPRA Paper 48765, University Library of Munich, Germany.

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