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Successive Trade Liberalization and Wage Inequality

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  • Acharyya, Rajat

Abstract

This paper examines the implications of initial conditions in terms of the levels of tariff protection from which countries liberalize their trade regimes on the wage inequality in trading nations. The discussion is confined to the standard two-country Heckscher-Ohlin-Samuelson model to see whether there can be channels, other than those discussed in the recent literature, through which the observed phenomena can be theoretically predicted. The initial conditions are observed to matter in the sense that for countries lowering their tariff levels successively than once and for all, intra-country wage inequality may change asymmetrically at different stages of liberalization.

Suggested Citation

  • Acharyya, Rajat, 2010. "Successive Trade Liberalization and Wage Inequality," MPRA Paper 30158, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:30158
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    File URL: https://mpra.ub.uni-muenchen.de/30158/1/MPRA_paper_30158.pdf
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    References listed on IDEAS

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    1. Shigemi Yabuuchi & Sarbajit Chaudhuri, 2009. "Skill Formation, Capital Adjustment Cost And Wage Inequality," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 21(1), pages 2-13, March.
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    6. Davis, Donald, 1996. "Trade Liberalization And Income Distribution," Harvard Institute for International Development (HIID) Papers 294371, Harvard University, Kennedy School of Government.
    7. Krugman, Paul R., 2000. "Technology, trade and factor prices," Journal of International Economics, Elsevier, vol. 50(1), pages 51-71, February.
    8. Donald R. Davis, 1996. "Trade Liberalization and Income Distribution," Harvard Institute of Economic Research Working Papers 1769, Harvard - Institute of Economic Research.
    9. Lloyd A. Metzler, 1949. "Tariffs, the Terms of Trade, and the Distribution of National Income," Journal of Political Economy, University of Chicago Press, vol. 57(1), pages 1-1.
    10. Jones, Ronald W & Engerman, Stanley L, 1996. "Trade, Technology, and Wages: A Tale of Two Countries," American Economic Review, American Economic Association, vol. 86(2), pages 35-40, May.
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    Cited by:

    1. Acharyya, Rajat, 2011. "A note on quantitative trade restrictions, income effects and wage inequality," Economic Modelling, Elsevier, vol. 28(6), pages 2628-2633.

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    More about this item

    Keywords

    Successive tariff reductions; Wage Inequality; Heckscher-Ohlin Model; Bilateral trade liberalization; Metzler paradox;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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