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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
    File Function: First version, 2013
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    References listed on IDEAS

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    6. Beyer, Harald & Rojas, Patricio & Vergara, Rodrigo, 1999. "Trade liberalization and wage inequality," Journal of Development Economics, Elsevier, vol. 59(1), pages 103-123, June.
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    Cited by:

    1. Yoshimichi Murakami, 2018. "Globalization and Income Inequality in Latin America: A Review of Theoretical Developments and Recent Evidence," Discussion Paper Series DP2018-16, Research Institute for Economics & Business Administration, Kobe University, revised Aug 2018.

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