Trade Liberalisation and Wages in Developing Countries

Posted: 16 Mar 2004

See all articles by Jorge Arbache

Jorge Arbache

Development Bank of Latin America - CAF

Andrew P. Dickerson

University of Warwick - Institute for Employment Research (IER)

Francis Green

University of Kent - Department of Economics

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Abstract

This paper reviews the effects of trade liberalisation on wages in developing countries, and presents new evidence for Brazil. Wages fell substantially in the traded sector after trade liberalisation, consistent with there being reduced rents as industries faced greater competition. After trade liberalisation there was an increase in the marginal returns to college education. Within the traded sector, the impact of increasing openness on wages was insignificant for those in the top two education groups but negative for lower level education groups. These findings are consistent with the hypothesis that imported technology raised the relative demand for highly skilled labour.

Keywords: trade liberalization, technology, returns to education, wages, employment, income distribution, developing countries

JEL Classification: J3, J6, J31, F16, D33, D15

Suggested Citation

Arbache, Jorge and Dickerson, Andrew P. and Green, Francis, Trade Liberalisation and Wages in Developing Countries. Available at SSRN: https://ssrn.com/abstract=517142

Jorge Arbache (Contact Author)

Development Bank of Latin America - CAF ( email )

Av Canaval Moreyra 380
Lima, Lima
Peru
+ 55 61 98194 4529 (Phone)

Andrew P. Dickerson

University of Warwick - Institute for Employment Research (IER) ( email )

Coventry CV4 7AL
United Kingdom

Francis Green

University of Kent - Department of Economics ( email )

Keynes College
Kent, CT2 7NP
United Kingdom

HOME PAGE: http://www.kent.ac.uk/economics/staff/gfg/

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