Abstract
This paper attempts to empirically explore the effects of trade liberalization process in Tunisia on average real wages and wage inequality, via industry rents. For this purpose, we adopt, following Revenga (1997), a flexible model of wage setting that can accommodate both the presence of rent-sharing behavior and competitive wage determination. Results suggest that the quasi-rent reduction is one of the adjustment mechanisms used by Tunisian manufacturing firms to face trade policy changes. Two more inter-related findings deserve interest: skilled labor was more able than unskilled labor to capture rents before trade reforms. Hence, the reduction of rents appears to have reduced wage inequality between skilled and unskilled labor, over the period 1998-2002.
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