DP8382 Trade Liberalization and the Wage Skill Premium: Evidence from Indonesia

Author(s): Mary Amiti, Lisa Cameron
Publication Date: May 2011
Keyword(s): import tariffs, intermediate inputs, wage inequality
JEL(s): F10, F12, F13, F14, F16
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8382

In this paper, we analyze the effect of reducing import tariffs on intermediate inputs and final goods on the wage skill premium within firms in Indonesia ? a country with a high share of unskilled workers. We present a new finding that reducing input tariffs reduces the wage skill premium within firms that import their intermediate inputs. However, we do not find significant effects from reducing tariffs on final goods on the wage skill premium within firms.