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Export liberalization, job creation and the skill premium : evidence from the U.S.-Vietnam bilateral trade agreement
 
Author:Fukase, Emiko; Collection Title:Policy Research working paper ; no. WPS 6419
Country:United States; Vietnam; Date Stored:2013/04/24
Document Date:2013/04/01Document Type:Policy Research Working Paper
SubTopics:Economic Theory & Research; Free Trade; Trade Policy; Labor Markets; Labor PoliciesLanguage:English
Region:Rest Of The World; East Asia and PacificReport Number:WPS6419
Volume No:1 of 1  

Summary: This paper explores how the expansion of labor-intensive manufacturing exports resulting from the United States-Vietnam Bilateral Trade Agreement in 2001 translated into wages of skilled and unskilled workers and the skill premium in Vietnam through the channel of labor demand. In order to isolate the impacts of trade shock from the effects of other market-oriented reforms, a strategy of exploiting the regional variation in difference in exposure to trade is employed. Using the data on panel individuals from the Vietnam Household Living Standards Surveys of 2002 and 2004, and addressing the issue of endogeneity, the results confirm the existence of a Stolper-Samuelson type effect. That is, those provinces more exposed to the increase in exports experienced relatively larger wage growth for unskilled workers and a decline of (or a smaller increase in) the relative wages of skilled and unskilled workers. During the period 2000-2004, the skill premium increased for Vietnam's economy as a whole in the sample of panel individuals. Thus, the Stolper-Samuelson type effect appears to have mitigated but did not outweigh the impacts of other factors that contributed to the rise in the skill premium.

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