Trade Liberalisation and Wages in Developing Countries
36 Pages Posted: 17 Oct 2003
There are 2 versions of this paper
Trade Liberalisation and Wages in Developing Countries
Abstract
This paper first reviews theoretical and empirical studies of the effects of trade liberalisation on wages in developing countries. It then presents new evidence for the case of Brazil which experienced a period of rapid trade liberalisation at the beginning of the 1990s. Conditional on education and work experience, we find that wages fell substantially in the traded sector after trade liberalisation. This is consistent with there being reduced rents as industries faced greater competition. Conditional wages also fell, though by a smaller amount, in the non-traded sector, possibly reflecting spill-over effects. However, due to increasing education levels, there was little overall change in the average wage level for the whole economy.
Averaged over the whole post-liberalisation period, there was an increase in the marginal returns to college education. Within the traded sector, the impact of increasing openness on wages was insignificant for those in the top two education groups, but negative for lower level education groups. These findings are consistent with the hypothesis that, following trade liberalisation, imported technology raises the relative demand for highly skilled labour.
Keywords: trade liberalisation, technology, wages, employment, income distribution, developing countries, returns to education, Brazil
JEL Classification: J3, J6, J31, F16, D33, O15
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Changes in Wage Structure in Urban India 1983-2004: A Quantile Regression Decomposition
-
Globalization and Employment: Imported Skill Biased Technological Change in Developing Countries
By Andrea Conte and Marco Vivarelli
-
A Hybrid Production Structure in Trade: Theory and Implications
-
On the Mechanics of Trade-Induced Structural Transformation
By Sylvain Dessy, Flaubert Mbiekop, ...
-
Progress in Participation in Tertiary Education in India from 1983 to 2004
By Mehtabul Azam and Andreas Blom
-
The Effect of a Change in Legislation on the Wage Gap in Brazil