Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of Atlanta
FRB Atlanta Working Paper
Trade and the skill premium in developing countries: the role of intermediate goods and some evidence from Peru
Joy Mazumdar
Myriam Quispe-Agnoli
Abstract

The rise in income inequality in developing countries after trade liberalization has been a puzzle for trade theory, which predicts the opposite effect. The authors present a model with imported intermediate goods in which the relative wages of skilled labor can rise due to higher imports of inputs or due to skill-biased technological change. The evidence from Peru in the post-liberalization phase in the early 1990s supports the skilled-biased technological change hypothesis. The authors find that most of the decrease in the blue-collar wage share in the manufacturing industries can be explained by the increase in machinery imports that followed liberalization, suggesting that the skilled-biased technology is embodied in imported machinery.


Download Full text
Cite this item
Joy Mazumdar & Myriam Quispe-Agnoli, Trade and the skill premium in developing countries: the role of intermediate goods and some evidence from Peru, Federal Reserve Bank of Atlanta, FRB Atlanta Working Paper 2002-11, 2002.
More from this series
JEL Classification:
Subject headings:
Keywords: Peru ; Economic development ; Latin America ; Trade
For corrections, contact Elaine Clokey ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal