Trade Liberalization and the Wage Skill Premium: Evidence from Indonesia

Amiti, Mary; Cameron, Lisa

doi:10.1016/j.jinteco.2012.01.009

Cited by 133 publications

(150 citation statements)

References 32 publications

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“…In line with earlier studies by Amiti and Konings (2007), Amiti and Cameron (2012), and Kis-Katos and The impacts of trade liberalization reach beyond the labour market, as we find reduced marriage rates among females aged 20-29 and males aged 30-39. The increased work participation and associated reduction in women's specialization in domestic duties thus had broader social effects, in line with previous findings in Bangladesh (Heath and Mobarak 2015) and India (Jensen, 2012).…”

supporting

confidence: 92%

“…These effects outweighed negative labour market effects due to reductions in import tariffs on final outputs, leading to a net reduction in poverty (Kis-Katos and Sparrow 2015). Consistent with these results, other studies have shown that input trade liberalization increased firms' sales and profits through the channel of intermediate goods (Amiti and Konings 2007), while the industrial skill premium decreased (Amiti and Cameron 2012). In this paper, we extend this work by analysing gender specific labour market impacts.…”

Section: Introductionsupporting

confidence: 77%

“…In both rounds of trade liberalization, tariff cuts were greatest in the previously most protected sectors and took place across the board, without any substantial exemptions from tariff reduction at the sectoral level (Basri and Hill, 1996). As described in the introduction, previous studies have shown that the reforms led to increased sales and profits for manufacturing firms, a reduction in the skill premium, and to 5 employment growth and poverty reduction (Amiti and Konings 2007, Amiti and Cameron 2012, KisKatos and Sparrow 2015.…”

Section: Trade Liberalization In Indonesia In the 1990smentioning

confidence: 97%

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Globalization and Social Change: Gender-Specific Effects of Trade Liberalization in Indonesia

2018

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Globalization and Social Change: Gender-Specific Effects of Trade Liberalization in Indonesia februAry 2017Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. Globalization and Social Change: Gender-Specific Effects of Trade Liberalization in Indonesia *We analyse the gender-specific effects of trade liberalization on work participation and hours of work and primary participation in domestic duties in Indonesia. We show that female work participation increased in relative terms in regions that were more exposed to input tariff reductions, whereas the effects of output tariff changes were much less pronounced. When looking at the potential channels for these effects, we find that in Indonesia the structure of initial protection was considerably more female-biased than skillbiased and hence reductions in input tariffs have especially benefited sectors with a larger initial concentration of female workers. This has led to a relative expansion of more female intensive sectors as well as to a decrease in gender segregation of occupation, especially among the low skilled. We also find that labour markets are a key channel through which trade liberalization affects marriage decisions. Delayed marriage among both sexes is related to input tariff liberalization, especially in the younger cohorts, as the improved labour opportunities for women reduce the returns to marriage. JEL Classification:F13, F16, J12, J16, J21

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supporting

confidence: 92%

Section: Introductionsupporting

confidence: 77%

Section: Trade Liberalization In Indonesia In the 1990smentioning

confidence: 97%

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Globalization and Social Change: Gender-Specific Effects of Trade Liberalization in Indonesia

2018

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“…Whereas the above studies suggest that trade liberalization increases wage inequality, Amiti & Cameron (2012) reach a different conclusion for Indonesia. They look at the impact of trade liberalization on within-firm wage skill premia, distinguishing between reductions in input tariffs and reductions in output tariffs.…”

Section: Trade and Wage Inequalitymentioning

confidence: 79%

Trade Liberalization and Poverty: What Have We Learned in a Decade?

Winters

Martuscelli

2014

Annu. Rev. Resour. Econ.

111

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This article reviews key recent literature on the effects of trade liberalization on poverty in developing countries and asks whether our knowledge has changed significantly over a decade. The conclusion that liberalization generally boosts income and thus reduces poverty has not changed; some authors suggest that this finding is not true for very poor countries, but this suggestion is far from proven at present. With regard to microeconomics, recent literature again confirms that liberalization has very heterogeneous effects on poor households, depending, inter alia, on what trade policies are liberalized and how the household earns its living. Working in the export sector predicts gains, and working in the import-competing sector predicts losses, a finding that is reinforced by studies of the effects of liberalization on wages. New research has suggested several ways in which intrasectoral wage inequality is increased by trade, but this research generally does not indicate that the poor actually lose. A fairly common finding is that female workers gain from trade liberalization.

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“…9 8 We disregard firm heterogeneity and intra-sector reallocations for the sake of tractability, being aware that this important channel of adjustment has been studied extensively in the above-mentioned literature and is not alternative to the industry-wide cost-saving channel identified here. 9 See Attanasio et al (2004), Goldberg and Pavcnik (2005), Gonzaga et al (2006), Amiti and Davis (2011), Amiti and Cameron (2012). The only partial exception is Behrman et al (2007), who focus on the effect of trade reform on wage differentials for Latin American countries.…”

Section: Introductionmentioning

confidence: 99%

Trade liberalization and the wage gap: the role of vertical linkages and fixed costs

2017

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This paper studies the labor market impacts of trade liberalization, and specifically tariff reductions, with a focus on the wage gap between skilled and unskilled workers in presence of vertical linkages in the fixed costs of production. To that purpose, we develop and empirically test a monopolistic competition model with variable elasticity of substitution and labor differentiated by skill level, where skilled workers are the residual claimants of savings on imported inputs. Consistently with the model predictions, we find that a 10% reduction in tariffs implies on average a 3.8% increase in the wage gap. In addition, the same level of tariff reduction is expected to lower unskilled employment in domestic production by 3.3%, which is partially offset by an expansion of unskilled employment in the export segment of production. These results are obtained matching detailed international trade data with World Input-Output Tables and EU KLEMS data on country-sector wage by skill level on 17 OECD countries from 1996 to 2005.The original version of this article was revised: In the original publication of the article, the sign ''\'' has been converted into latex code 'lt0' and the sign ''['' has been missed in one of the equations. The equation has been corrected in this article.

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Trade Liberalization and the Wage Skill Premium: Evidence from Indonesia

Cited by 133 publications

References 32 publications

Globalization and Social Change: Gender-Specific Effects of Trade Liberalization in Indonesia

Globalization and Social Change: Gender-Specific Effects of Trade Liberalization in Indonesia

Trade Liberalization and Poverty: What Have We Learned in a Decade?

Trade liberalization and the wage gap: the role of vertical linkages and fixed costs

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