Heterogenous impacts of trade liberalization on individual wages: Evidence from Thailand

Abstract

This study empirically examines how trade liberalization changes individuals' wages, with evidence from Thailand. We primarily focus on the effect of Thailand's tariff reduction under the ASEAN free trade regime. We use individual-level employment data for 2001, 2006, 2011, and 2016. We find that the reduction in AFTA tariffs in Thailand decreases the relative wages of the more educated and skilled workers. Thus, trade liberalization contributes to narrowing income inequality in terms of education and skills. Contrastingly, we do not find heterogeneous effects according to age, sex, marital status, location, or company size. Moreover, the results do not differ significantly between industries with or without international competitiveness.