Publication: Does Tariff Liberalization Increase Wage Inequality? Some Empirical Evidence
The objective of the paper is to answer an often asked question: If tariff rates are reduced, what will happen to wage inequality? The authors consider two types of wage inequality: between occupations (skills premium) and between industries. They use two large databases of wage inequality that have recently become available and a large data set of average tariff rates covering the period between 1980 and 2000. The authors find that tariff reduction is associated with higher inter-occupational and inter-industry inequality in poorer countries (those below the world median income) and the reverse in richer countries. However, the results for inter-occupational inequality must be treated with caution.
“Milanovic, Branko; Squire, Lyn. 2005. Does Tariff Liberalization Increase Wage Inequality? Some Empirical Evidence. Policy Research Working Paper; No. 3571. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/f3039d5e-6b9f-5884-868c-0327fa4ccae3 License: CC BY 3.0 IGO.”
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