Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Gothenburg, Department of Economics

No 148: Trade Reform and Wage Inequality in Kenya, 1964-2000

Arne Bigsten () and Dick Durevall ()
Additional contact information
Arne Bigsten: Department of Economics, School of Economics and Commercial Law, Göteborg University, Postal: Box 640, SE 405 30 GÖTEBORG
Dick Durevall: Department of Economics, School of Economics and Commercial Law, Göteborg University, Postal: Box 640, SE 40530 GÖTEBORG

Abstract: This paper analyses the evolution of wage inequality in Kenya between 1964 and 2000. Our measure of wage inequality is the ratio of wages in manufacturing to wages in agriculture, which can be seen as an indicator of sectoral wage-inequality or as a proxy for skilled to unskilled wages. We find that changes in relative wages have primarily been driven by the degree of openness, while other factors such as the capital-labour ratio, educational attainment, relative labour-productivity, and the ratio between agricultural and manufacturing prices had no significant effect. We conclude that international market integration has reduced wage-inequality in Kenya.

Keywords: Trade policy; globalisation; wage inequality; Kenya.

JEL-codes: D13; F13; O55

28 pages, October 27, 2004

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