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Trade Liberalization and Skill Premium in Chile

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  • Yoshimichi Murakami

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

This study empirically analyzes whether trade liberalization increases wage inequality between skilled and unskilled workers in Chile during 1974–2007. The findings show that tariff reductions contributed to increases in wage inequality by causing price reductions of unskilled labor-intensive goods protected with the highest tariffs prior to trade liberalization. In contrast, we found no evidence that new technologies embodied in capital and intermediate goods caused skill-biased technological change. In addition, this study shows that an increase in the relative supply of college equivalents did not contribute to wage equalization, while an increase in the minimum wages contributed to wage equalization during the period of the democratic governments.

Suggested Citation

  • Yoshimichi Murakami, 2013. "Trade Liberalization and Skill Premium in Chile," Discussion Paper Series DP2013-19, Research Institute for Economics & Business Administration, Kobe University.
  • Handle: RePEc:kob:dpaper:dp2013-19
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2013-19.pdf
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    References listed on IDEAS

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    Cited by:

    1. Yoshimichi Murakami, 2021. "Trade liberalization and wage inequality: Evidence from Chile," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 30(3), pages 407-438, April.
    2. García Muñoz, Teresa María & Milgram Baleix, Juliette & Odeh, Omar Odeh, 2020. "Inequality in Latin America: The role of the nature of trade and partners," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 14, pages 1-35.

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