The Impact of Trade Liberalization on Wage Inequality: Evidence from Argentina

Galiani, Sebastián; Sanguinetti, Pablo

doi:10.2139/ssrn.2372198

Cited by 75 publications

(93 citation statements)

References 28 publications

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“…More generally, the result that the elimination of trade protection leads to an increase in unskilled wages is somehow at odds with most of the existing empirical literature on the impact of trade liberalization on wages in developing countries, which shows that tariff liberalization leads to relative increases in skilled wages (Galiani and Sanguinetti, 2003, Goldberg and Pavcnik, 2004and 2007, Revenga, 1997or Robertson, 2004. Note that there are some important exceptions such as Gonzaga, Menezes Filho and Terra (2006) This more ambiguous result on the export side could be partly explained by the fact that price shocks to which SSA exporters are exposed reflect the structure of protection in the rest-of-the-world, which may tend to protect more skilled jobs, and therefore may benefit skilled workers more than what would have been expected by a simple Stolper-Samuelson prediction.…”

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confidence: 88%

Pro-poor trade policy in Sub-Saharan Africa

Nicita¹,

Olarreaga

Porto

2014

Journal of International Economics

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The objective of this paper is to estimate the potential pro-poor bias in the existing structure of protection in six Sub-Saharan African (SSA) countries (i.e., whether it redistributes income from rich to poor households). We also explore the extent to which the barriers faced by SSA exporters in the rest-of-the-world are biased in favor of poor or rich household. To this end, we start with a simple agricultural household production model and propose an extension to include adjustments in labor income associated with changes in unskilled and skilled wages. We then build indicators that capture the differences in welfare changes across income levels associated with the elimination of SSA's own trade protection, as well as trade protection on SSA's export bundle by the rest-of-the-world. Results suggest that SSA's own trade policy is biased in favor of poor households. In contrast, the trade policies of SSA's trading partners tend to be biased in favor of SSA's rich households, especially when ad-valorem equivalents of NTMs are taken into account. JEL CODES: F13, F16

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confidence: 88%

Pro-poor trade policy in Sub-Saharan Africa

Nicita¹,

Olarreaga

Porto

2014

Journal of International Economics

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“…Trade is often mentioned as a driving force for the inequality increase in Argentina, Brazil, Chile and Mexico (Goldberg and Pavcnik, 2007;Galiani and Sanguinetti, 2003;Green et al, 2001;Pavcnik, 2003;Robertson, 2004). The literature examining the forces behind the recent inequality decline is much less extensive, and it concludes that traditional trade channels are unlikely to account for a significant fraction of the observed trends.…”

Section: Introductionmentioning

confidence: 99%

Skill Premium, Labor Supply and Changes in the Structure of Wages in Latin America

Fernández¹,

Messina²

2017

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work is licensed under a Creative Commons IGO 3.0 AttributionNonCommercial-NoDerivatives (CC-IGO BY-NC-ND 3.0 IGO) license (http://creativecommons.org/licenses/by-nc-nd/3.0/igo/ legalcode) and may be reproduced with attribution to the IDB and for any non-commercial purpose, as provided below. No derivative work is allowed.Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB's name for any purpose other than for attribution, and the use of IDB's logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license.Following a peer review process, and with previous written consent by the Inter-American Development Bank (IDB), a revised version of this work may also be reproduced in any academic journal, including those indexed by the American Economic Association's EconLit, provided that the IDB is credited and that the author(s) receive no income from the publication. Therefore, the restriction to receive income from such publication shall only extend to the publication's author(s). With regard to such restriction, in case of any inconsistency between the Creative Commons IGO 3.0 Attribution-NonCommercial-NoDerivatives license and these statements, the latter shall prevail.Note that link provided above includes additional terms and conditions of the license.The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the Inter-American Development Bank, its Board of Directors, or the countries they represent.http://www.iadb.org 2017 Abstract * Earnings inequality declined rapidly in Argentina, Brazil and Chile during the 2000s. A reduction in the experience premium is a fundamental driver of declines in upper-tail (90/50) inequality, while a decline in the education premium is the primary determinant of the evolution of lower-tail (50/10) inequality. Relative labor supply is important for explaining changes in the skill premiums. Relative demand trends favored high-skilled workers during the 1990s, shifting in favor of low-skilled workers during the 2000s. Changes in the minimum wage, and more importantly, commodity-led terms of trade improvements are key factors behind these relative skill demand trends.JEL classifications: J20, J31

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“…6 Therefore, when poor and highly populated countries such as India and China opened their economies to the rest of the world, as they did it in the 1980s, the supply of unskilled labor increased at a worldwide level, and this could explain the pattern of wage inequality observed in middle-income countries (Wood, 1997). 4 See, for example, Hanson and Harrison (1999), Cragg and Epelbaum (1996), Epelbaum and Cragg (1997), Revenga (1997), Feliciano (2001), Meza (1999), Robertson (2001), and Cañonero and Werner (2002) for the case of Mexico; Beyer, et al (1999) for Chile; Galiani and Sanguinetti (2003) for Argentina; Gonzaga et al (2002) for Brazil;andRobbins (1996a, 1996b), Wood (1997) for several developing countries. See also IADB (2002) for a recent survey.…”

Section: Introductionmentioning

confidence: 99%

Technology, trade, and wage inequality in Mexico before and after NAFTA

Esquivel

Rodrı́guez-López

2003

Journal of Development Economics

134

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Abstract:Over the past few years, there has been a substantial increase in wage inequality between skilled and unskilled workers in Mexico. This increment in the wage gap coincided with both a period of rapid technological change and the process of trade liberalization in Mexico that began in the mid-eighties. Using a methodology suggested by Leamer (1998), we separate out the effects of technological progress and trade on the real wage evolution of skilled and unskilled workers in Mexico's manufacturing industry for the periods 1988-1994 and 1994-2000. We find that, as implied by the Stolper-Samuelson theorem, trade liberalization would have led to a reduction in the wage gap in Mexico in the first period. This effect, however, was offset by the large negative impact of technological progress on the real wage of unskilled workers. On the other hand, during the period 1994-2000 the effect of trade liberalization on the wage gap was nil, thus suggesting that the slight increase in wage inequality that occurred in this period was also driven by technological progress.JEL classification: F16, J31

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The Impact of Trade Liberalization on Wage Inequality: Evidence from Argentina

Cited by 75 publications

References 28 publications

Pro-poor trade policy in Sub-Saharan Africa

Pro-poor trade policy in Sub-Saharan Africa

Skill Premium, Labor Supply and Changes in the Structure of Wages in Latin America

Technology, trade, and wage inequality in Mexico before and after NAFTA

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