Does tariff liberalization increase wage inequality ? - Some empirical evidence Milanović, Branko

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Milanović, Branko
Income distribution - Econometric models.; Foreign trade regulation - Mathematical models.; Income distribution - Developing countries - Econometric models.
"The objective of the paper is to answer an often-asked question : if tariff rates are reduced, what will happen to wage inequality ? We consider two types of wage inequality : between occupations (skills premium), and between industries. We use two large data bases of wage inequality that have become recently available and a large dataset of average tariff rates all covering the period between 1980 and 2000. We 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. The results for inter-occupational inequality though must be treated with caution"--National Bureau of Economic Research web site.
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