Trade liberalization and rising wage inequality in Latin America: Reconciliation with HOS theory

Atolia, Manoj

doi:10.1016/j.jinteco.2006.06.005

Cited by 31 publications

(21 citation statements)

References 43 publications

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“…There are, however, some tentative theoretical explanations for the pattern. For example, Atolia (2007) has suggested that, under certain circumstances, even if the standard prediction from a Hecksher-Ohlin-Samuelson model works as predicted in the long-run, there may be some short-run (or transitory) effects of trade liberalization that may lead to a different outcome from those of the long-run. The difference between short-run and long-run effects on inequality result from two factors: first, an asymmetry in the contraction and expansion of some sectors, and second, because of the capital-skill complementarity in production.…”

Section: Concluding Remarks: the Rise And Fall Of Income Inequality Amentioning

confidence: 99%

The Rise and Fall of Income Inequality in Mexico, 1989–2010 *

Campos-Vázquez¹,

Esquivel²,

Lustig³

2014

Falling Inequality in Latin America

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We examine the role of market forces (demand and supply of labour by skill), institutional factors (minimum wages and unionization rate), and public policy (cash transfers) in explaining changes in inequality. We apply the 're-centred influence function' method to decompose changes in hourly wages into characteristics and returns. The main driver is changes in returns. Returns rose (1989-94) due to institutional factors and labour demand. Returns declined (1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006) due to changes in supply and, to a lesser extent, in demand; institutional factors were not relevant. Government transfers contributed to the decline in inequality, especially after 2000. Terms of use: Documents in

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Section: Concluding Remarks: the Rise And Fall Of Income Inequality Amentioning

confidence: 99%

The Rise and Fall of Income Inequality in Mexico, 1989–2010 *

Campos-Vázquez¹,

Esquivel²,

Lustig³

2014

Falling Inequality in Latin America

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“…13 See Acemoglu (2002) and Card and Di Nardo (2006), among others. 14 See also Acemoglu (2003), Atolia (2007) and Yeaple (2005).…”

mentioning

confidence: 99%

The Rise and Fall of Income Inequality in Latin America

Gasparini

Lustig

2011

Oxford Handbooks Online

198

117

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“…While such a model rationalizes our findings, other modeling frameworks with factor specificity are likely to play a role as well. In addition, Atolia (2007) develops an alternative model with capital complementarity of skills that would also allow for a reconciliation of HOS theory. The ultimate lesson is that the Stolper-Samuelson effects predicted for Latin America are found to play a role in shaping the wage distribution, but only after the incorporation of some mechanism for inter-industry wage differences.…”

Section: Discussionmentioning

confidence: 99%

Trends in Tariff Reforms and Trends in the Structure of Wages

Porto

Galiani

2008

SSRN Journal

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This paper provides new evidence on the impacts of trade reforms on wages. We first introduce a model of trade that combines a non-competitive wage setting mechanism due to unions with a factor abundance hypothesis. The predictions of the model are then econometrically investigated using Argentine data. Instead of achieving identification by comparing industrial wages before and after one episode of trade liberalization, our strategy exploits the recent historical record of policy changes adopted by Argentina: from significant protection in the early 1970s, to the first episode of liberalization during the late 1970s, then back to a slowdown of reforms during the 1980s, and finally to the second episode of liberalization in the 1990s. These swings in trade policy represent broken trends in trade reforms that we can compare with observed trends in wages and wage inequality. We use unusual historical data sets of trends in tariffs, wages, and wage inequality to examine the structure of wages in Argentina and to explore how it is affected by tariff reforms. We find that i) trade liberalization, ceteris paribus, reduces wages; ii) industry tariffs reduce the industry skill premium; iii) conditional on the structure of tariffs at the industry level, the average tariff in the economy is positively associated with the aggregate skill premium. These findings suggest that the observed trends in wage inequality in Latin America can be reconciled with the Stolper-Samuelson predictions in a model with unions. JEL CODES: F14 F16

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Trade liberalization and rising wage inequality in Latin America: Reconciliation with HOS theory

Cited by 31 publications

References 43 publications

The Rise and Fall of Income Inequality in Mexico, 1989–2010 *

The Rise and Fall of Income Inequality in Mexico, 1989–2010 *

The Rise and Fall of Income Inequality in Latin America

Trends in Tariff Reforms and Trends in the Structure of Wages

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