Congresos y reuniones científicas
Trade liberalisation and wage premium in Argentina. Further evidence from the 1990s
Congreso; XXIII Jornadas de Economía del Banco Central del Uruguay; 2008
Institución organizadora:
Banco Central del Uruguay
Latin American countries have been implementing policies directed to the removal of barriers on international trade. Among the reasons for following this strategy were the expectations it would help to reduce income inequality. The empirical evidence available is far from being conclusive. In the case of Argentina, the country started at the end of 1988 a unilateral reduction of imports barriers. During the 1990s the country also implemented a discriminatory liberalisation under the umbrella of MERCOSUR. Previous evidence has found increasing trade flows, especially imports, have been partially responsible for the observed increase in wage inequality. However, the estimated effects are rather small. Following Wood?s (1997) hypothesis we allow for the effects of trade liberalisation to vary depending on the skill intensity of production of exports and imports. The evidence for 1992-1999 confirms that the role of trade liberalisation has been relatively small. In our case this result is due to the presence of opposite effects that are a function of the degree of skill-intensity of trade flows. Contrary to the common belief, the raise in the wage premium of skilled labour worked mostly through the increase of skill intensive exports than through changes in imports which are intensive in unskilled labour.