Mamoon, Dawood and Murshed, S. Mansoob (2011): Labour Markets, Education and Duality of Returns.
Download (640kB) | Preview
The aim of this paper is to examine the impact of increased trade on wage inequality in developing countries, and whether a higher human capital stock moderates this effect. We look at the skilled-unskilled wage differential. When better educated societies open up their economies, increased trade is likely to induce less inequality on impact because the supply of skills better matches demand. But greater international exposure also brings about technological diffusion, further raising skilled labour demand. This may raise wage inequality, in contrast to the initial egalitarian level effect of human capital. We attempt to measure these two opposing forces. We also employ a broad set of indicators to measure trade liberalization policies as well as general openness, which is an outcome, and not a policy variable. We further examine what type of education most reduces inequality. Our findings suggest that countries with a higher level of initial human capital do well on the inequality front, but human capital which accrues through the trade liberalization channel has inegalitarian effects. Our results also have implications for the speed at which trade policies are liberalized, the implication being that better educated nations should liberalize faster.
|Item Type:||MPRA Paper|
|Original Title:||Labour Markets, Education and Duality of Returns|
|English Title:||Labour Markets, Education and Duality of Returns|
|Keywords:||Integration, Trade Liberalization, Wage Inequality|
|Subjects:||F - International Economics > F1 - Trade > F16 - Trade and Labor Market Interactions
F - International Economics > F1 - Trade > F15 - Economic Integration
O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O24 - Trade Policy ; Factor Movement Policy ; Foreign Exchange Policy
C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C21 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions
|Depositing User:||Dawood Mamoon|
|Date Deposited:||16. Mar 2011 01:18|
|Last Modified:||20. Feb 2013 07:53|
Acemoglu, D. (2001) ‘Human Capital Policies and the Distribution of Income: A Framework for Analysis and Literature Review,’ Treasury Working Paper Series 01/03 http://ideas.repec.org/p/nzt/nztwps/01-03.html
Acemoglu, D. (1999) ‘Patterns of Skill Premia,’ NBER Working Papers 7018, National Bureau of Economic Research, Inc
Acemoglu, D., S. Johnson and J. Robinson (2004) ‘Institutions as the Fundamental Cause of Long-Run Growth,’ NBER Working Papers 10481, National Bureau of Economic Research, Inc.
Alcala, F. and A. Ciccone (2002) ‘Trade and Productivity’, CEPR Discussion Paper No. 3095.
Amann, E., N. Aslnindis, F. Nixon and B. Walters (2002) ‘Economic Growth and Poverty Alleviation: A Reconsideration of Dollar and Kraay’, Development Economic Discussion Papers, No. 0407, http://les.man.ac.uk/ses/research/devpapers/Povertyconference%5B1%5D.pdf.
Arbache, J.S., A. Dickerson and F. Green (2004) ‘Trade Liberalization and Wages in Developing Countries’, Economic Journal 114(493): 73-96.
Aghion, P., C. Eve and C. Garcia-Penalosa (1999) ‘Inequality and Economic Growth: The Perspective of the New Growth Theories’, Journal of Economic Literature XXXVII: 1615-60 (December).
Barro, R. J. (1999) ‘ Does and Income Gap put a Hex on growth,’ Business Week, 29 March
Barro, R. J. and J. W. Lee (2001) ‘International Data on Educational Attainment: Updates and Implications,’Oxford Economic Papers, Oxford University Press, 53 (3), 541-63
Barro, R. J. and J. W. Lee (1996) ‘International Measures of Schooling Years and Schooling Quality,’ American Economic Review, American Economic Association,.86 (2), 218-23
Behrman, J.R., N. Birdsall and M. Szelely (2001) ‘Pobreza, Desigualdad, y Liberalizacion Comercial y Financiera en America Latina’, Inter American Development Bank (IADB), Washington DC, http://www.undp.org/rblac/liberalization/docs/capitulo3.pdf.
Bourguignon, F. and C. Morrison (1999) ‘Income Distribution, Development and Foreign Trade: A Cross Section Analysis’, European Economic Review 34(6): 1113-32.
Cockburn, J. (2002) ‘Trade Liberalization and Poverty in Nepal: A Computable General Equilibrium Micro Simulation Analysis’, The Centre for the Study of African Economies Working Paper Series. Working Paper 170, http://www.bepress.com/csae/paper170.
Chen, S. and M. Ravallion (2003) ‘Household Welfare Impacts of China’s Accession to the World Trade Organization’, World Bank Policy Research Working Paper 3040, www.econ.worldbank.org/files/26013_wps3040.pdf.
Dollar, D. and A. Kraay (2004) ‘Trade, Growth, and Poverty’, Economic Journal 114: F22-F49.
Dollar, D. and A. Kraay (2002). ‘ Growth Is Good for the Poor,’ Journal of Economic Growth, Springer, vol. 7(3), pages 195-225,
Edwards, S. (1998 ) ‘Openness, Productivity and Growth: What Do We Real¬ly Know?’, Economic Journal 108: 383-98.
Eiche, T.S. and G.P. Cecilia (2001) ‘Inequality and Growth: The Dual Role of Human Capital in Development’, Journal of Development Economics 66(1): 173-97.
Frankel, J. and D. Romer (1999) ‘Does Trade Cause Growth?’ American Economic Review 89(3): 379-99.
Fischer, R. D. (2001) ‘The Evolution of Inequality after Trade Liberalization’, Journal of Development Economics 66: 555-79.
Friedman, J. (2000) ‘Differential Impacts of Trade Liberalisation on Indonesia’s Poor and Non-Poor’, Conference on International Trade and Poverty, Stockholm (20 October).
Goldberg, Pinelop, K. and Pavcnik, Nina (2004), ‘Trade, Inequality and Poverty: What Do We Know? Evidence From Recent Trade Liberalization Episodes in Developing Countries,’ Conference Paper Brooking Trade Forum, 2004 http://www.econ.yale.edu/~pg87/brookings.pdf
Greenaway D., W. Morgan and P. Wright (2001) ‘Trade Liberalisation and Growth in Developing Countries’, Journal of Development Economics 67: 229-34.
Hanson, G. and A. Harisson (1999) ‘Trade and Wage Inequality in Mexico’, Industrial and Labor Relations Review 52(2): 271-88.
Harrison, A. (1996) ‘Openness and growth: A Time-Series, Cross Country Analysis for Developing Countries,’ Journal of Development Economics, 48, 419-447
Hiscox, M.J. and Kastner, S. L. (2002)’A General Measure of Trade Policy Orientations: Gravity-Model-Based Estimates for 83 Nations, 1960 to 1992.’ UCSD Working Paper
Jayasuriya, S. (2002) ‘Globalisation, Equity and Poverty: The South Asian Experience’, Annual Global Conference of GDN, Cairo, Egypt.
Krueger, A. B. and M. Lindahl (2001) ‘ Education for Growth: Why and For Whom?’ Journal of Economic Literature, (39), 1101-1136
Leamer, E. (1988) ‘Measures of Openness’ in (R. Baldwin, ed.) Trade Policy and Empirical Analysis, Chicago: University of Chicago Press
Legovini A., C. Bouillon and N. Lustig (2001) ‘Can Education Explain Income Inequality Changes in Mexico?’, Inter-American Development Bank (IADB), Washington DC.
Lofgren, H. (1999) ‘Trade Reform and the Poor in Morocco: A Rural-Urban General Equilibrium Analysis of Reduced Protection’, TMD Discussion Paper No. 38, Washington DC: IFPRI.
Mamoon, D. and S.M. Murshed (2008) ‘Unequal skill premiums and trade liberalization: Is education the missing link?’ Economics Letters, 100(2): 262-266
Mamoon, D. (2008) ‘Trade, Poverty, Inequality and Security’, Phd Dissertation, Shaker Publishing Mamoon, D. (2005) ‘Education for all is Central to Higher Education Reforms in Developing Countries’, in A. Boeren and Gerrit Holtland (eds), A Changing Landscape - Making Support to Higher Education and Research in Developing Countries more Effective, the Netherlands: NUFFIC, http://www. nuffic.net/common.asp?id=1704.
Mamoon, D. (2004) ‘Poverty and Prosperity in Pakistan’, Asia Times, Honk Kong (24 March), http://www.atimes.com/atimes/South_Asia/FC25Df06. html /
Pritchett, L. (1996) ‘Measuring outward orientation in LDCs: Can it be done?’ Journal of Development Economics, 49 (2): 307-335
Ravallion, M (2003), ‘The Debate on Globalization, Poverty, and Inequality: Why Measurement Matters’, World Bank Policy Research Working Paper 3038, Washington DC, http://econ.worldbank.org/files/26010_wps3038. pdf.
Rodriguez, F. and D. Rodrik (2000) ‘Trade Policy and Economic Growth: A Skeptic’s Guide to the Cross-National Evidence’, NBER Macroeconomics Annual 2000, 15: 261.
Rodrik, D., A. Subramanian and F. Trebbi (2004) ‘Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development’, Journal of Economic Growth 9(2): 131-65.
Rose, A. K. (2004) ‘Do WTO Members Have a More Liberal Trade Policy?’ Journal of International Economics, 63(2): 209-235.
Sachs, J.D. and A. Warner (1995) ‘Economic Reform and Process of Global Integration’, Brookings Papers on Economic Activity 1: 1-118.
Tavares, J. (1998) Trade Openness, Factor Proportions and Politics, mimeo, Harvard University.
Tinbergen, J. (1975) Income Distribution: Analysis and Policies, Amsterdam: American Elsevier.
Tilak, J.B.G. (1989) Education and its Relation to Economic Growth, Poverty and Income Distribution, Washington DC: World Bank.
Teulings, C.N. and T.V. Rens (2002) ‘Education, Growth and Income Inequality’, CESifo Working Paper Series No. 653; Tinbergen Institute Working Paper No. 2002-001/3.
Winters, L.A. (2004) ‘Trade Liberalization and Economic Performance: An Overview’, The Economic Journal 114: 4-21.
Wood, A. and C. Ridao-Cano (1999) ‘Skill, Trade and International Inequality’, Oxford Economic Papers 5(1): 89-119.
World Bank(2001) A Globalised Market – Oppertunities and Risk for the Poor, Global Poverty Report, Washington DC
World Development Report (2006) Equity and Development, Washington DC: World Bank