IDEAS home Printed from https://ideas.repec.org/p/hhs/gunwpe/0205.html
   My bibliography  Save this paper

Trade Liberalization and Wage Inequality: Empirical Evidence from Bangladesh

Author

Listed:
  • Durevall, Dick

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Munshi, Farzana

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

This paper explores the relationship between trade liberalization and skilled-unskilled wage inequality in the Bangladesh cotton textile industry. A dynamic two-equation model is estimated for wages of skilled and unskilled workers over the period 1973-2002, using four different openness measures. In no case does opening up affect unskilled wages differently than skilled wages, implying that openness per se has not contributed to changes in wage inequality. Our findings also suggest that openness increased real wages for both skilled and unskilled workers.

Suggested Citation

  • Durevall, Dick & Munshi, Farzana, 2006. "Trade Liberalization and Wage Inequality: Empirical Evidence from Bangladesh," Working Papers in Economics 205, University of Gothenburg, Department of Economics.
    • Handle: RePEc:hhs:gunwpe:0205
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/2077/2709
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jorge Saba Arbache & Andy Dickerson & Francis Green, 2004. "Trade Liberalisation and Wages in Developing Countries," Economic Journal, Royal Economic Society, vol. 114(493), pages 73-96, February.
    2. Bhaskar, V & Khan, Mushtaq, 1995. "Privatization and Employment: A Study of the Jute Industry in Bangladesh," American Economic Review, American Economic Association, vol. 85(1), pages 267-273, March.
    3. Koujianou Goldberg, Pinelopi & Pavcnik, Nina, 2003. "The response of the informal sector to trade liberalization," Journal of Development Economics, Elsevier, vol. 72(2), pages 463-496, December.
    4. Galiani, Sebastian & Sanguinetti, Pablo, 2003. "The impact of trade liberalization on wage inequality: evidence from Argentina," Journal of Development Economics, Elsevier, vol. 72(2), pages 497-513, December.
    5. Mohammad A. Hossain & Mohammad Alauddin, 2005. "Trade liberalization in Bangladesh: the process and its impact on macro variables particularly export expansion," Journal of Developing Areas, Tennessee State University, College of Business, vol. 39(1), pages 127-150, September.
    6. Daron Acemoglu, 2003. "Patterns of Skill Premia," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 199-230.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Munshi, Farzana, 2006. "Does openness reduce wage inequality in developing countries? A panel data analysis," Working Papers in Economics 241, University of Gothenburg, Department of Economics, revised 06 Feb 2008.
    2. Farzana Munshi, 2012. "Does Openness Reduce Wage Inequality In Developing Countries? Panel Data Evidence From Bangladesh," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 57(02), pages 1-12.
    3. Hashim, Danish & Banga, Rashmi, 2009. "Impact of Trade on Labour Productivity and Wage Inequality in India," MPRA Paper 35200, University Library of Munich, Germany.
    4. repec:dau:papers:123456789/12528 is not listed on IDEAS
    5. Alam, Mohammad Jahangir & Bhuiyan, Nazmul & Begum, Ismat Ara & Van Huylenbroeck, Guido, 2012. "Tracing the Poverty Impact of Market Reforms in Bangladesh," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 123758, International Association of Agricultural Economists.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Paolo Giordano & Kun Li, 2012. "An Updated Assessment of the Trade and Poverty Nexus in Latin America," IDB Publications (Working Papers) 79119, Inter-American Development Bank.
    2. Zouhair Mrabet, 2012. "The Impact of Trade Liberalization on Labor Market of Developing Countries: What can Literature tell us?," Journal of Economics and Behavioral Studies, AMH International, vol. 4(6), pages 307-318.
    3. Giordano, Paolo & Li, Kun, 2012. "An Updated Assessment of the Trade and Poverty Nexus in Latin America," IDB Publications (Working Papers) 4209, Inter-American Development Bank.
    4. Jorge Friedman & Nanno Mulder & Sebastián Faúndez & Esteban Pérez Caldentey & Carlos Yévenes & Mario Velásquez & Fernando Baizán & Gerhard Reinecke, 2011. "Openness, Wage Gaps and Unions in Chile: A Micro Econometric Analysis," OECD Trade Policy Papers 134, OECD Publishing.
    5. Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "Distributional Effects of Globalization in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 45(1), pages 39-82, March.
    6. Julien Gourdon, 2011. "Wage inequality in developing countries: South–South trade matters," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 58(4), pages 359-383, December.
    7. Kis-Katos, Krisztina & Sparrow, Robert, 2015. "Poverty, labor markets and trade liberalization in Indonesia," Journal of Development Economics, Elsevier, vol. 117(C), pages 94-106.
    8. Rafael Dix-Carneiro & Brian K. Kovak, 2015. "Trade Reform and Regional Dynamics: Evidence From 25 Years of Brazilian Matched Employer-Employee Data," NBER Working Papers 20908, National Bureau of Economic Research, Inc.
    9. Peter Howard-Jones & Jens Hölscher, 2020. "The Influence Of The Washington Consensus Programme On The Transitional Economies Of Eastern Europe – A Firm-Level Analysis," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 65(226), pages 9-44, July – Se.
    10. Brian, McCaig, 2011. "Exporting out of poverty: Provincial poverty in Vietnam and U.S. market access," Journal of International Economics, Elsevier, vol. 85(1), pages 102-113, September.
    11. Gallego, Francisco A., 2012. "Skill Premium in Chile: Studying Skill Upgrading in the South," World Development, Elsevier, vol. 40(3), pages 594-609.
    12. Munshi, Farzana, 2006. "Does openness reduce wage inequality in developing countries? A panel data analysis," Working Papers in Economics 241, University of Gothenburg, Department of Economics, revised 06 Feb 2008.
    13. Dessy, Sylvain & Mbiekop, Flaubert & Pallage, Stéphane, 2010. "On the mechanics of trade-induced structural transformation," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 251-264, March.
    14. Paula Bustos, 2005. "The impact of trade liberalization on skill upgrading. Evidence from Argentina," Economics Working Papers 1189, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2011.
    15. Lanouar Charfeddine & Zouhair Mrabet, 2015. "Trade liberalization and relative employment: further evidence from Tunisia," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 5(1), pages 173-202, June.
    16. Harris, Richard G. & Robertson, Peter E., 2013. "Trade, wages and skill accumulation in the emerging giants," Journal of International Economics, Elsevier, vol. 89(2), pages 407-421.
    17. Rossana Patron & Marcel Vaillant, 2012. "Can Education Policy Address The Wage Gap? A Note On Public Skill Formation In Developing Countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 24(3), pages 369-378, April.
    18. Arslan Razmi, 2007. "Integration, Informalization, and Income Gaps in Developing Countries: Some General Equilibrium Explorations in Light of Accumulating Evidence," UMASS Amherst Economics Working Papers 2007-06, University of Massachusetts Amherst, Department of Economics.
    19. Dix-Carneiro, Rafael & Kovak, Brian K., 2019. "Margins of labor market adjustment to trade," Journal of International Economics, Elsevier, vol. 117(C), pages 125-142.
    20. Attanasio, Orazio & Goldberg, Pinelopi K. & Pavcnik, Nina, 2004. "Trade reforms and wage inequality in Colombia," Journal of Development Economics, Elsevier, vol. 74(2), pages 331-366, August.

    More about this item

    Keywords

    Bangladesh; cotton textile industry; openness; relative wages; trade liberalization; wage inequality;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:gunwpe:0205. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jessica Oscarsson (email available below). General contact details of provider: https://edirc.repec.org/data/naiguse.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.