Trade Liberalization and the Wage Skill Premium: Evidence from Indonesia
30 Pages Posted: 19 May 2011
Date Written: May 2011
In this paper, we analyze the effect of reducing import tariffs on intermediate inputs and final goods on the wage skill premium within firms in Indonesia - a country with a high share of unskilled workers. We present a new finding that reducing input tariffs reduces the wage skill premium within firms that import their intermediate inputs. However, we do not find significant effects from reducing tariffs on final goods on the wage skill premium within firms.
Keywords: import tariffs, intermediate inputs, wage inequality
JEL Classification: F10, F12, F13, F14, F16
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