Trade Liberalization and Skill Premium in Chile


This study empirically analyzes whether trade liberalization increases wage inequality between skilled and unskilled workers in Chile during 1974–2007. The findings show that tariff reductions contributed to increases in wage inequality by causing price reductions of unskilled labor-intensive goods protected with the highest tariffs prior to trade liberalization. In contrast, we found no evidence that new technologies embodied in capital and intermediate goods caused skill-biased technological change. In addition, this study shows that an increase in the relative supply of college equivalents did not contribute to wage equalization, while an increase in the minimum wages contributed to wage equalization during the period of the democratic governments.


Yoshimichi MURAKAMI
Research Institute for Economics and Business Administration
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: +81-78-803-7036
FAX: +81-78-803-7059