Effect of Trade Liberalisation on Wage Inequality in Indonesia

  • Watekhi Watekhi Statistics Indonesia
  • Nachrowi D Nachrowi Faculty of Economics and Business, Universitas Indonesia
  • Djoni Hartono Faculty of Economics and Business, Universitas Indonesia
  • Arie Damayanti Faculty of Economics and Business, Universitas Indonesia

Abstract

This study attempts to find out the influence of trade liberalisation on wage inequality in Indonesia. A two-stage estimation approach is used. Using the national labour force survey dataset, the study estimates industry wage premium and industry-specific skill premium in the first stage conditional on individual worker characteristics. In the second stage, the study regresses industry wage premium and industry-specific skill premium on tariff as a measure of trade liberalisation, respectively. It is concluded that trade liberalisation significantly contributes to increasing wage inequality. This contribution occurred through changes in industry wage premium but not industry-specific skill premium.

Published
2018-11-09
How to Cite
WATEKHI, Watekhi et al. Effect of Trade Liberalisation on Wage Inequality in Indonesia. Malaysian Journal of Economic Studies, [S.l.], v. 55, n. 2, p. 209-229, nov. 2018. ISSN 1511-4554. Available at: <http://mjes.um.edu.my/index.php/MJES/article/view/14565>. Date accessed: 13 dec. 2018.
Section
Articles