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Trade Liberalization and Wage Inequality: Empirical Evidence from Bangladesh

Artikel i vetenskaplig tidskrift
Författare Dick Durevall
Farzana Munshi
Publicerad i Journal of Bangladesh Studies
Volym 16
Nummer/häfte 1-2
Sidor 13-24
ISSN 1529-0905
Publiceringsår 2014
Publicerad vid Centrum för globalisering och utveckling (GCGD)
Institutionen för nationalekonomi med statistik
Sidor 13-24
Språk en
Ämnesord Bangladesh, openness, relative wages, trade liberalization, wage inequality
Ämneskategorier Nationalekonomi

Sammanfattning

The prediction of standard economic theory that trade liberalization reduces income inequality in developing countries has been challenged by several studies during recent decades. This paper explores this issue by analyzing the relationship between trade liberalization and skilled-unskilled wage inequality in the Bangladesh cotton textile industry. First cointegration analysis is used to test for long-run relationships between real wages and trade liberalization over the period 1971-2010, and then a two-equation error correction model is estimated for wages of skilled and unskilled workers. Trade liberalization, proxied by the evolution of Bangladesh’s international trade, is associated with increased real wages for both skilled and unskilled workers. The relative skilled-unskilled workers’ wage fluctuates over the study period, but it has no trend and is not related to increased openness. Trade liberalization thus seems to have increased labor productivity in the cotton textile industry without any noticeable effects on wage inequality.

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