{
  "title": "Trade Liberalization and Wage Inequality: Evidence From India",
  "publication": "IMF Working Papers, January 1, 2005",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/trade-liberalization-and-wage-inequality-evidence-from-india-17911",
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  "summary": "We evaluate empirically the impact of the dramatic 1991 trade liberalization in India on the industry wage structure. The empirical strategy uses variation in industry wage premiums and trade policy across industries and over time.",
  "sections": [
    {
      "heading": "Summary and main findings",
      "content": "- Evaluates empirically the impact of the 1991 trade liberalization in India on the industry wage structure.\n- Uses variation in industry wage premiums and trade policy across industries and over time.\n- Finds a strong, negative, and robust relationship between changes in trade policy and changes in industry wage premiums over time.\n- Results are consistent with liberalization-induced productivity increases at the firm level that get passed on to industry wages.\n- Because tariff reductions were proportionately larger in sectors that employ a larger share of unskilled workers, the increase in wage premiums in these sectors implies that unskilled workers experienced an increase in their relative incomes.\n- Conclusion: trade liberalization has led to decreased wage inequality in India."
    },
    {
      "heading": "Methodology and empirical strategy",
      "content": "- Empirical strategy leverages variation across industries and over time in:\n  - industry wage premiums\n  - trade policy (tariff changes and related measures)\n- Compares industry-level changes in wage premiums with industry-level changes in trade policy to identify effects of liberalization."
    },
    {
      "heading": "Interpretation and mechanisms",
      "content": "- The negative relationship between changes in trade policy and changes in industry wage premiums is interpreted as reflecting:\n  - productivity increases at the firm level induced by liberalization\n  - transmission of firm-level productivity gains into higher industry wages\n- Distributional implication hinges on the cross-sectoral pattern of tariff reductions:\n  - sectors with larger tariff cuts tended to employ a larger share of unskilled workers\n  - wage premium increases in those sectors raised unskilled workers’ relative incomes"
    },
    {
      "heading": "Keywords and subject focus",
      "content": "- Subject: Tariffs, Trade barriers, Trade liberalization, Wage adjustments, Wages\n- Keywords: coverage ratio, industry indicator, industry wage difference, trade policy, wage premium, WP"
    },
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      "heading": "Publication metadata (from source)",
      "content": "- Authors: Prachi Mishra, Utsav Kumar\n- Date: January 1, 2005\n- Series: Working Paper No. 2005/020\n- Issue: 020\n- Pages: 42\n- ISBN: 9781451860399\n- ISSN: 1018-5941\n- DOI: https://doi.org/10.5089/9781451860399.001\n\nIMF Working Paper — Prachi Mishra and Utsav Kumar (January 1, 2005).\n\n---\n\n Content in this bundle\n\n- wp0520\n  - wp0520 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp0520 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/trade-liberalization-and-wage-inequality-evidence-from-india-17911"
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    "Authors: Prachi Mishra, Utsav Kumar",
    "Published: January 1, 2005",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451860399.001",
    "Evaluates empirically the impact of the 1991 trade liberalization in India on the industry wage structure.",
    "Uses variation in industry wage premiums and trade policy across industries and over time.",
    "Finds a strong, negative, and robust relationship between changes in trade policy and changes in industry wage premiums over time.",
    "Results are consistent with liberalization-induced productivity increases at the firm level that get passed on to industry wages.",
    "Because tariff reductions were proportionately larger in sectors that employ a larger share of unskilled workers, the increase in wage premiums in these sectors implies that unskilled workers experienced an increase in their relative incomes.",
    "Conclusion: trade liberalization has led to decreased wage inequality in India.",
    "Empirical strategy leverages variation across industries and over time in:",
    "Compares industry-level changes in wage premiums with industry-level changes in trade policy to identify effects of liberalization.",
    "The negative relationship between changes in trade policy and changes in industry wage premiums is interpreted as reflecting:",
    "Distributional implication hinges on the cross-sectoral pattern of tariff reductions:",
    "Subject: Tariffs, Trade barriers, Trade liberalization, Wage adjustments, Wages",
    "Keywords: coverage ratio, industry indicator, industry wage difference, trade policy, wage premium, WP",
    "Authors: Prachi Mishra, Utsav Kumar",
    "Date: January 1, 2005",
    "Series: Working Paper No. 2005/020",
    "Issue: 020",
    "Pages: 42",
    "ISBN: 9781451860399",
    "ISSN: 1018-5941",
    "DOI: https://doi.org/10.5089/9781451860399.001",
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