Globalization and wage inequality: the case of Tunisia

By Aicha Amaidi

http://econpapers.repec.org/paper/pramprapa/47266.htm

Globalization improves the structure of production by generating a greater use of capital and thus greater demand for skilled relative to unskilled labor. Thus, with the opening and the increased demand for unskilled labor would decrease inequality in developing countries. According to the traditional literature (the theory of international trade and the Stolper Samuelson), trade liberalization should raise compensation of abundant factors. Thus, developing countries are better placed than the developed countries for producing goods and service intensive unskilled labor. The result is a downward pressure on the wages of unskilled workers in developed countries and, conversely, an upward pressure on those of their counterparts in developing countries. However, some extensions to this theory indicate that some developing countries may experience an increase their wage inequality. In this context, we’re trying to verify these contributions in the case of Tunisia.

The study of the impact of globalization, in particular the development of trade and technical progress on the change in qualification or wage inequality poses difficulties for most studies. The major difficulty is to distinguish the influence of trade and international trade of other determinants of changes in the qualifying developing countries. In fact, all the methods of analysis of existing research on the impact of technological developments on the labor market, including wage inequality remains until today marked by uncertainty. In fact, the non-availability of data and the difficulty of measuring technical progress may be the cause of this uncertainty.

Because of the importance of structural economic changes during the period (1983-1993), which is characterized by the implementation of a structural adjustment program (SAP) characterized mainly by a partial liberalization of the Tunisian economy the decomposition has been redone for the two sub periods 1983-1987 (the period prior to the SAP and economic liberalization) and 1988-1993 (period after SAP and economic liberalization).

The complementarity between capital and qualification was in favor of skilled workers and that by increasing their earnings at the expense of unskilled workers. The diffusion of new technologies and capital accumulation largely explain the increase in inequality in wages between skilled and unskilled workers.

In addition, increased investment in research and development and capital accumulation largely wage inequality between skilled and unskilled workers in the Tunisian manufacturing. Plus the rate of capital accumulation is, the greater will be the demand for skilled workers from industries.

The econometric results have some limits. Thus, the series of all variables are short to obtain satisfactory results. In addition, the reliability of the results cannot be explained by the particular nature of the variables used in the model, such as variable salary made based on a number of assumptions.