Trade liberalization and wage inequality in India: a mandated wage equation approach

Abstract

Purpose

This paper aims to examine the relationship between trade liberalization and wages in India.

Design/methodology/approach

This paper uses an empirical approach based on the “mandated wage equations”.

Findings

The main result in the paper is that trade reforms have been associated with a rise in the relative wages of medium‐skilled workers (defined as having completed secondary schooling). The authors do not find any evidence for trade reforms to be associated with an increase or decrease in wage inequality between low and high‐skilled workers. The results are consistent with the predictions of the Stolper‐Samuelson theorem.

Originality/value

The main contribution of this paper is to add to the debate on trade reforms and inequality in India by focusing on the variation in skill categories.

Citation

Mishra, P. and Kusum Das, D. (2013), "Trade liberalization and wage inequality in India: a mandated wage equation approach", Indian Growth and Development Review, Vol. 6 No. 1, pp. 113-127. https://doi.org/10.1108/17538251311329577