Trade Liberalization and Wage Inequality: Evidence from India

Utsav Kumar and Prachi Mishra

Review of Development Economics, 2008, vol. 12, issue 2, pages 291-311

Abstract: We evaluate empirically the impact of the dramatic 1991 trade liberalization in India on the industry wage structure. The empirical strategy uses variation in industry wage premiums and trade policy across industries and over time. In contrast to most earlier studies on developing countries, we find a strong, negative, and robust relationship between changes in trade policy and changes in industry wage premiums over time. The results are consistent with liberalization-induced productivity increases at the firm level, which get passed on to industry wages. We also find that trade liberalization has led to decreased wage inequality between skilled and unskilled workers in India. This is consistent with the magnitude of tariff reductions being relatively larger in sectors with a higher proportion of unskilled workers. Copyright © 2007 The Authors.

Date: 2008
View citations in EconPapers

Downloads: (external link)
http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-9361.2007.00388.x link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Trade Liberalization and Wage Inequality: Evidence from India (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:bla:rdevec:v:12:y:2008:i:2:p:291-311

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1363-6669

Access Statistics for this article

Review of Development Economics is edited by E. Kwan Choi

More articles in Review of Development Economics from Blackwell Publishing
Series data maintained by Christopher F. Baum ().