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Trade Protection and Industry Wage Structure in Poland

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  • Chor-ching Goh
  • Beata Smarzynska Javorcik

Abstract

This study examines the impact of Poland's trade liberalization 1994-2001 on the industry wage structure. The liberalization was undertaken in preparation for Poland's accession to the European Union and was more pronounced in industries with larger shares of unskilled labor. Our analysis indicates that a decrease in an industry tariff was associated with higher wages being earned by workers employed in the industry, controlling for worker characteristics and geographic variables. The result is robust to including year and industry fixed effects, controlling for industry-level exports, imports, concentration, stock of foreign direct investment and capital accumulation. The finding is consistent with liberalization increasing competitive pressures, forcing firms to restructure and improve their productivity, which in turn translates into higher profits being shared with workers. It could also be potentially attributed to trade liberalization lowering the costs of imported inputs which enhances firm profitability. The result holds when skilled workers are excluded from the sample, thus suggesting that reductions in trade barriers benefited the unskilled in terms of an increase in wages.

Suggested Citation

  • Chor-ching Goh & Beata Smarzynska Javorcik, 2005. "Trade Protection and Industry Wage Structure in Poland," NBER Working Papers 11143, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:11143
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    Cited by:

    1. Arnold, Jens M. & Javorcik, Beata S. & Mattoo, Aaditya, 2011. "Does services liberalization benefit manufacturing firms?: Evidence from the Czech Republic," Journal of International Economics, Elsevier, vol. 85(1), pages 136-146, September.
    2. Elizabeth Jane Casabianca, 2012. "Distributional effects of preferential and multilateral trade liberalization: the case of Paraguay," FIW Working Paper series 083, FIW.
    3. Ann Harrison, 2007. "Globalization and Poverty," NBER Books, National Bureau of Economic Research, Inc, number harr06-1.
    4. Ann Harrison & Margaret McMillan, 2007. "On the links between globalization and poverty," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 5(1), pages 123-134, April.
    5. Gabrisch, Hubert, 2009. "Vertical Intra-Industry Trade, Technology and Income Distribution: A Panel Data Analysis of EU Trade with Central-East European Countries," MPRA Paper 64181, University Library of Munich, Germany.
    6. Utsav Kumar & Prachi Mishra, 2008. "Trade Liberalization and Wage Inequality: Evidence from India," Review of Development Economics, Wiley Blackwell, vol. 12(2), pages 291-311, May.

    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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