A Noteon Terms of Trade Shocks and the Wage Gap

International Monetary Fund

No 2010/279, IMF Working Papers from International Monetary Fund

Abstract: Using Chilean data, we document that for resource-rich small open economies the effects of terms of trade shocks on the wage gap (between skilled and unskilled workers) depend on factor intensities in the non-tradable sector, following the model in Galiani, Heymann, and Magud (2010). For a skilled-intensive non-tradable sector we show that improvements in the terms of trade benefit skilled workers. We also show that this relation holds at the industry level: the wage gap widens in skilled-intensive sectors while it shrinks in unskilled-intensive ones, the more so as terms of trade volatility decreases.

Keywords: WP; wage; skilled worker; real wage; Non-tradable goods; terms of trade shocks; distributive conflict; terms of trade shock; terms of trade coefficient; terms of trade datum; terms of trade term; terms of trade result; Terms of trade; Wage gap; Income distribution; Unskilled labor; Manufacturing; Global (search for similar items in EconPapers)
Pages: 27
Date: 2010-12-01
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Citations: View citations in EconPapers (1)

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