Capital Market Integration and Wages

Anusha Chari, Peter Blair Henry and Diego Sasson

American Economic Journal: Macroeconomics, 2012, vol. 4, issue 2, 102-32

Abstract: For three years after the typical emerging economy opens its stock market to inflows of foreign capital, the average annual growth rate of the real wage in the manufacturing sector increases by a factor of three. No such increase occurs in a control group of countries that do not liberalize. The temporary increase in wage growth drives up the level of the average worker's annual compensation by US $487—an increase equal to nearly one-fifth of their annual pre-liberalization salary. Overall, the results suggest that trade in capital may have a larger impact on wages than trade in goods. (JEL E25, E44, F16, F43, G18, O16)

JEL-codes: E25 E44 F16 F43 G18 O16 (search for similar items in EconPapers)
Date: 2012
Note: DOI: 10.1257/mac.4.2.102
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Citations: View citations in EconPapers (18)

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Working Paper: Capital Market Integration and Wages (2009)
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