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Trade Protection and Inter-industry Wages in India

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  • Puja Vasudeva Dutta

    () (National Council of Applied Economic Research, New Delhi)

Abstract

Using a unique database of individual data and industry-level tariff rates and other industry characteristics, this paper examines the link between trade protection and inter-industry wage premia in India during a period of rapid trade liberalisation. These premia represent differentials solely due to the industry affiliation of the worker after controlling for other worker characteristics. This paper finds that the impact of protection on the inter-industry wage premia is substantially positive - workers employed in industries with high tariffs receive higher wages than apparently identical workers in low tariff industries. This positive tariff-wage effect is evident whether or not industry specific effects are included and is consistent with the Ricardo-Viner trade model.

Suggested Citation

  • Puja Vasudeva Dutta, 2004. "Trade Protection and Inter-industry Wages in India," PRUS Working Papers 27, Poverty Research Unit at Sussex, University of Sussex.
  • Handle: RePEc:pru:wpaper:27
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    File URL: http://www.sussex.ac.uk/Units/PRU/wps/wp27.pdf
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    Cited by:

    1. Keshab Raj Bhattarai, 2016. "Economic Growth and Development in India and SAARC Countries," EcoMod2016 9631, EcoMod.
    2. Nathalie Chusseau & Joël Hellier, 2012. "Inequality in Emerging Countries," Working Papers hal-00993411, HAL.
    3. Sahoo, Amarendra & ten Raa, Thijs, 2012. "Wage–productivity differentials and Indian economic efficiency," Economic Modelling, Elsevier, vol. 29(2), pages 341-348.
    4. Philip Du Caju & François Rycx & Ilan Tojerow, 2012. "Wage structure effects of international trade in a small open economy: the case of Belgium," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(2), pages 297-331, June.
    5. Nathalie Chusseau & Joël Hellier, 2012. "Globalisation and Inequality: Where do we stand?," Journal of Income Distribution, Journal of Income Distribution, vol. 21(3-4), pages 7-34, November.
    6. Badri Narayanan G., 2005. "Effects of Trade liberalisation, Environmental and Labour Regulations on Employment in India's Organised Textile Sector," Labor Economics Working Papers 22363, East Asian Bureau of Economic Research.
    7. Chatterji, Monojit & Choudhury, Homagni, 2010. "The Changing Inter-Industry Wage Structure of the Organised Manufacturing Sector in India, 1973-74 to 2003-04," SIRE Discussion Papers 2010-89, Scottish Institute for Research in Economics (SIRE).
    8. Philip Du Caju & François Rycx & Ilan Tojerow, 2011. "Wage Structure Effects of International Trade: Evidence from a Small Open Economy," Working Papers CEB 11-011, ULB -- Universite Libre de Bruxelles.
    9. Sahoo, A., 2008. "Essays on the Indian economy : Competitive pressure, productivity and performance," Other publications TiSEM 374e9035-815c-43fe-a68e-e, Tilburg University, School of Economics and Management.
    10. Said, Mona & Elshennawy, Abeer, 2010. "The impact of trade liberalization on manufacturing employment and wages in Egypt 1990-2007," MPRA Paper 25759, University Library of Munich, Germany.
    11. Chamarbagwala, Rubiana, 2006. "Economic Liberalization and Wage Inequality in India," World Development, Elsevier, vol. 34(12), pages 1997-2015, December.
    12. Bushra Yasmin, 2009. "Trade Liberalization and the Lead Role of Human Capital and Job Attributes in Wage Determination: The Case of Pakistan’s Labor Market," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 14(1), pages 1-37, Jan-Jun.
    13. Keshab Raj BHATTARAI, "undated". "Trade and Poverty in South Asia," EcoMod2010 259600027, EcoMod.
    14. Goldar, Bishwanath. & Sadhukhan, Amit., 2015. "Employment and wages in Indian manufacturing : post-reform performance," ILO Working Papers 994881323402676, International Labour Organization.
    15. repec:ilo:ilowps:488132 is not listed on IDEAS
    16. Puja Vasudeva Dutta, 2005. "Accounting for Wage Inequality in India," PRUS Working Papers 29, Poverty Research Unit at Sussex, University of Sussex.
    17. Chahir Zaki, 2011. "On Trade Policies and Wage Disparity in Egypt: Evidence from Microeconomic Data," Working Papers 606, Economic Research Forum, revised 08 Jan 2011.
    18. Asuyama, Yoko, 2011. "Skill sorting, inter-industry skill wage premium, and production chains: evidence from India 1999-2000," IDE Discussion Papers 278, Institute of Developing Economies, Japan External Trade Organization(JETRO).

    More about this item

    Keywords

    India; inter-industry wages; trade reforms;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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