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Does tariff liberalization increase wage inequality ? - Some empirical evidence, Volume 1
Author:Milanovic, Branko; Squire, Lyn; Country:World;
Date Stored:2005/04/25Document Date:2005/04/01
Document Type:Policy Research Working PaperSubTopics:Inequality; Environmental Economics & Policies; Free Trade; Poverty Impact Evaluation; Economic Theory & Research
Language:EnglishRegion:The World Region
Report Number:WPS3571Collection Title:Policy, Research working paper ; no. WPS 3571
Volume No:1  

Summary: The objective of the paper is to answer an often asked question: If tariff rates are reduced, what will happen to wage inequality? The authors consider two types of wage inequality: between occupations (skills premium) and between industries. They use two large databases of wage inequality that have recently become available and a large data set of average tariff rates covering the period between 1980 and 2000. The authors 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. However, the results for inter-occupational inequality must be treated with caution.

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