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    Trade Reform, Managers and Skill Intensity: Evidence from India

    Chakraborty, Pavel | June 2019
    Abstract
    India underwent a significant structural transformation through trade liberalization and other reforms (domestic) in the 1990s because of a balance-of-payments crisis. I use this episode to identify the causal effect of a drop in tariffs on wage inequality, measured through managerial and nonmanagerial compensation, between 1990 and 2011. I find that a drop in input tariffs (and not output) significantly increases the share of managerial compensation. In other words, a decline in tariffs on intermediate inputs raised within-firm wage inequality. A 10% drop in tariffs increases the managerial compensation by 0.5%‒3.5%. Additionally, I find that this increase in the compensation for managers (or observed increase in wage inequality) can possibly be explained by the rise in skill intensity, but only for firms below halfway in the size distribution. On the other hand, I do not find any evidence of a demand shift from nonmanagers due to a drop in tariffs, leading to inconclusive evidence in favor of skill premium. Additional analysis reveals that it is also the drop in the supply of skilled labor, coupled with demand shifts (toward managerial workers), that led to the rise in the demand for skill for certain categories of workers.
    Citation
    Chakraborty, Pavel. 2019. Trade Reform, Managers and Skill Intensity: Evidence from India. © Asian Development Bank Institute. http://hdl.handle.net/11540/10439.
    Keywords
    Development
    Trade
    Development Goals
    Skills Development
    Sustainable Development
    Trade Flows
    Trade And Development
    Food Security And Trade
    Trade Volume
    Trade Potential
    Trade Flows
    External Trade
    Industrial policy
    New technology
    Innovations
    Industry
    Export policy
    Import policy
    Trade Unions
    Natural Resources
    Services Trade
    SMEs
    E-commerce
    Development assistance
    ADB
    Curriculum development
    Development assistance
    Development aid
    Development indicators
    Development potential
    Development models
    Project appraisal
    Performance appraisal
    Regional development bank
    Trade development
    Import volume
    Export volume
    Service industry
    Career development
    Vocational training
    Contract Labor
    Labor income
    Labor policy
    Manpower policy
    Promotions
    Career development
    Job analysis
    Self-evaluation
    Supervisors
    Capital
    Business
    Communication in rural development
    Social participation
    Occupational training
    Partnership
    Joint venture
    System analysis
    Labor and globalization
    Labor policy
    Regional trading blocs
    Foreign trade and employment
    Developing countries
    Industrial priorities
    Technological innovation
    Technology transfer
    Foreign trade regulation
    Industrial relations
    Trade-unions
    Small business
    Unions
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    Citable URI
    http://hdl.handle.net/11540/10439
    Metadata
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    Author
    Chakraborty, Pavel
    Theme
    Development
    Trade
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise