NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Does Tariff Liberalization Increase Wage Inequality? Some Empirical Evidence

Branko Milanovic, Lyn Squire

NBER Working Paper No. 11046
Issued in January 2005
NBER Program(s):   ITI

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.

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Document Object Identifier (DOI): 10.3386/w11046

Published: Does Tariff Liberalization Increase Wage Inequality? Some Empirical Evidence, Branko Milanovic, Lyn Squire. in Globalization and Poverty, Harrison. 2007

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