Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/46628 
Year of Publication: 
2010
Series/Report no.: 
UPSE Discussion Paper No. 2010,06
Publisher: 
University of the Philippines, School of Economics (UPSE), Quezon City
Abstract: 
We examine the role of trade liberalization in accounting for increasing wage inequality in the Philippines from 1994 to 2000 - a period over which trade protection declined and inequality increased dramatically. Using the approach of Ferreira, Leite, and Wai-Poi (2007), we find that trade-induced effects on industry wage premia and industry-specific skill premia account for an economically insignificant increase in wage inequality. A more substantial role for trade liberalization comes through trade-induced employment reallocation effects whereby reductions in protection appear to have led to a shift of employment to more protected sectors, especially services where wage inequality tended to be high to begin with. Nevertheless, the key drivers of wage inequality appear to be changes in economy-wide returns to education and changes in industry membership over and above those accounted for by our estimates of trade-induced employment reallocation effects. In order for trade liberalization to account for a relatively large portion of the increases in wage inequality, it would have to be a major determinant of the changes in economy-wide returns to education.
Document Type: 
Working Paper

Files in This Item:
File
Size
585.79 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.