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Does tariff liberalization increase wage inequality ? - Some empirical evidence
Author:Milanovic, Branko; Squire, Lyn; Collection Title:Policy, Research working paper ; no. WPS 3571
Country:World; Date Stored:2005/04/25
Document Date:2005/04/01Document Type:Policy Research Working Paper
SubTopics:Environmental Economics & Policies; Economic Theory & Research; Free Trade; Inequality; Poverty Impact EvaluationLanguage:English
Region:The World RegionReport Number:WPS3571
Volume No:1 of 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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