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Does tariff liberalization increase wage inequality? Some empirical evidence

  • Branko Milanovic

    (Carnegie Endowment for International Peace)

  • Lyn Squire

    (Global Development Network)

The objective of the paper is to answer an often-asked question : if tariff rates are reduced, what will happen to wage inequality ? We consider two types of wage inequality : between occupations (skills premium), and between industries. We use two large data bases of wage inequality that have become recently available and a large dataset of average tariff rates all covering the period between 1980 and 2000. We find that tariff reduction is associated with higher inter-occupational and inter-industry inequality in poorer countries (those below the world median income) and the reverse in richer countries. The results for inter-occupational inequality though must be treated with caution.

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File URL: http://econwpa.repec.org/eps/lab/papers/0501/0501012.pdf
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Paper provided by EconWPA in its series Labor and Demography with number 0501012.

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Length: 64 pages
Date of creation: 27 Jan 2005
Date of revision:
Handle: RePEc:wpa:wuwpla:0501012
Note: Type of Document - pdf; pages: 64
Contact details of provider: Web page: http://econwpa.repec.org

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