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Wage structure effects of international trade in a small open economy: The case of Belgium

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  • Philip Du Caju
  • François Rycx
  • Ilan Tojerow

Abstract

This paper investigates the impact of international trade on wage dispersion in a small open economy, Belgium. It is one of the few to: (i) use detailed, matched employer-employee data to compute industry wage premia and disaggregated industry-level panel data to examine the impact of changes in international trade on changes in wage differentials, (ii) simultaneously analyse both imports and exports, and (iii) examine the impact of imports according to the country of origin. Looking at the export side, we find (on the basis of the system generalized method of moments estimator) a positive effect of exports on industry wage premia. The results also show that import penetration has a significant and negative impact on industry wage differentials. However, the detrimental effect of imports on wages is found to be significantly greater when imports originate from low and middle-income countries than from high-income countries. © 2012 Kiel Institute.

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  • Philip Du Caju & François Rycx & Ilan Tojerow, 2012. "Wage structure effects of international trade in a small open economy: The case of Belgium," ULB Institutional Repository 2013/138896, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:ulb:ulbeco:2013/138896
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    Cited by:

    1. Kampelmann, Stephan & Mahy, Benoît & Rycx, Francois & Vermeylen, Guillaume, 2016. "Who Is Your Perfect Match? Educational Norms, Educational Mismatch and Firm Profitability," IZA Discussion Papers 10399, Institute for the Study of Labor (IZA).
    2. Garnero, Andrea & Rycx, Francois & Terraz, Isabelle, 2018. "Productivity and Wage Effects of Firm-Level Collective Agreements: Evidence from Belgian Linked Panel Data," IZA Discussion Papers 11568, Institute for the Study of Labor (IZA).
    3. Neil Foster-McGregor & Robert Stehrer & Gaaitzen Vries, 2013. "Offshoring and the skill structure of labour demand," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(4), pages 631-662, December.
    4. R. Giuliano & B. Mahy & F. Rycx & G. Vermeylen, 2017. "Does corporate social responsibility make over-educated workers more productive?," Applied Economics, Taylor & Francis Journals, vol. 49(6), pages 587-605, February.
    5. Romina Giuliano & Stephan Kampelmann & Benoît Mahy & François Rycx, 2017. "Short Notice, Big Difference? The Effect of Temporary Employment on Firm Competitiveness across Sectors," British Journal of Industrial Relations, London School of Economics, vol. 55(2), pages 421-449, June.
    6. repec:taf:intecj:v:31:y:2017:i:1:p:51-67 is not listed on IDEAS
    7. Nathalie Scholl, 2015. "The Impact of Trade on Wage Inequality in Developing Countries: Technology vs. Comparative Advantage," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 190, Courant Research Centre PEG.
    8. Evangelia Papapetrou & Pinelopi Tsalaporta, 2016. "Inter-industry wage differentials in Greece: rent-sharing and unobserved heterogeneity hypotheses," Working Papers 213, Bank of Greece.

    More about this item

    Keywords

    Inter-industry wage differentials; International trade; Matched employer-employee data; Wage structure;

    JEL classification:

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

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