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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