Trade and Wage Inequality in Developing Countries: South-South Trade Matter

No 200710, Working Papers from CERDI

Abstract: The relationship between trade liberalization and inequality has received considerable attention in recent years. The primary purpose of this paper is to present new results on the sources of wage inequalities in manufacturing taking into account South-South (S-S) trade. Globalization not only leads to increasing North-South (N-S) trade, but the direction and composition of trade has also changed. More trade is carried out between developing countries. We observe increasing wage inequality is more due to the South-South trade liberalization than to the classical trade liberalization with northern countries. The second purpose is to elucidate the link between the direction of trade and technological change, arguing that it might explain why we obtain different results for South-South trade and North-South trade on wage inequality. A part of this increasing wage inequality due to S-S trade comes from the development of N-S trade relationship in S-S trade which increases wage inequality in middle income developing countries. However the fact that S-S trade is more skill intensive sector oriented increase wage inequality for all developing countries.

Keywords: International trade; Wage Inequality; Skill-biased technical change (search for similar items in EconPapers)
Pages: 53
Date: 2007
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Wage inequality in developing countries: South–South trade matters (2011)
Working Paper: Trade and Wage Inequality in Developing Countries: South-South Trade Matter (2011)
Working Paper: Trade and Wage Inequality in Developing Countries: South-South Trade Matter (2011)
Working Paper: Trade and Wage Inequality in Developing Countries: South-South Trade Matters (2007)
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