Munich Personal RePEc Archive

Skilled-Unskilled Wage Asymmetries as an Outcome of Skewed International Trade Patterns in the South

Mamoon, Dawood (2017): Skilled-Unskilled Wage Asymmetries as an Outcome of Skewed International Trade Patterns in the South.

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Abstract

The paper tries to find out the impact of trade liberalization on income inequality. The literature suggests that trade favors one segment of the society over other and cause uneven development. For example, one possible way through which inequality is suspected to seep into the economy through processes of liberalization is by increasing the relative wages of skilled labor as compared to the unskilled ones. Empirical evidence is provided to this effect by employing Theil Wage inequality Index and up to 28 different concepts of openness/ trade policy. OLS as well as 2SLS regressions with numerous specifications were run. It is found out that openness not only causes wage inequality but the relationship is significant for the developing countries. Additionally, the study also suggests that human capital, which is accrued from liberalization processes, is responsible for amplifying wage inequality.

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