Trade Reform and Inequality: The Case of Mexico and Argentina in the 1990s

This paper provides empirical assessments of one of the leading explanations for the increase in skill premium in Mexico and Argentina during the 1990s: trade liberalisation. We present evidence showing that imports increase skill premium in Mexico, while exports reduce it. In Argentina, trade increased skill premium in the early 1990s (the beginning of trade reforms), although it reduced it later in the decade. These results are helpful for a comparison between South–South integration, FTAA or bilateral FTAs with Northern economies as alternative trade policy options for Latin American countries.