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Bloch, Carolina
Soares, Sergei
Year of Publication: 
Series/Report no.: 
Texto para Discussão No. 2492
Abstract (Translated): 
In this paper, we estimate the distributive impacts of trade openness on within sector income distribution. The empirical approach is to estimate the econometric relation between effective rates of protection and various indicators of within sector inequality: the Gini and Theil indices of wage inequality in each economic sector, the ratio between wages of production and nonproduction workers, and the ratio between the wage bill and value added for each sector. The econometric specification is a fixed effects model in which each sector is compared to itself in various moments in time. The results show a significant but small effect of trade openness upon wage inequality as measured by Gini and Theil Coefficients and also small effects in the opposite direction between trade openness and the wage bill to value added ratio. This means that a substantive reduction in effective rates of protection will lead to small reductions in wage inequality and even smaller increases in the functional inequality in each sector.
effective rates of protection
wage inequality
Document Type: 
Working Paper

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