The indicators of trade liberalisation used in the study are measures of the degree of import andexport penetration, namely the ratios of imports to output and exports to output by industry sector. Asin many previous studies, limited data availability means that other measures, such as the effective rateof tariff protection, are not an option. The trade data used are drawn from Malaysia’s official externaltrade database compiled by the Department of Statistics, Malaysia. These data are published at thetwo-digit Standard International Trade Classification level in,inter alia, the Department of Statistics’publication,Malaysia External Trade Statistics. Unpublished data at a more disaggregated level wasmade available by the Department of Statistics. These data, which are classified according to the three-digit Standard International Trade Classification level, have then been matched to the three-digitMalaysian Industrial Classification, 1972. The latter was the standard classification for industry sectorsused in all economic and household censuses and surveys conducted by the Department of Statisticsuntil 2000. Industry output data are compiled from the Department of Statistics’AnnualSurvey ofManufacturing Industries.Table 1.Descriptive statistics1984198919921995199790/10 decile ratio6.436.176.005.745.94SD (earnings)8160802580118256768790/10 decile ratio–trade sector6.315.615.014.945.32SD (earnings)–trade sector7980807675797700696190/10 decile ratio–non-trade sector6.276.086.365.976.16SD (earnings)–non-trade sector81907989812584217911Education (% with qualification)Degree184.108.40.206.14.9Diploma220.127.116.11.36.7MCE/SPM MCE/SPMV20.624.827.531.031.9High school cert1.93.14.04.34.0LCE/SRP/PMR12.610.814.315.114.2NA-qual18.104.22.168.43.5No formal qualification50.547.940.735.834.9Education–trade-sector (%)Degree22.214.171.124.22.6Diploma0.91.21.62.43.6MCE/SPM MCE/SPMV18.024.529.132.433.4High school cert126.96.36.199.92.4LCE/SRP/PMR13.611.418.017.616.2NA-qual5.54.03.53.93.2No formal qualification58.954.743.038.238.6Education–non-trade-sector (%)Degree188.8.131.52.85.8Diploma184.108.40.206.47.8MCE/SPM MCE/SPMV21.224.836.930.531.3High school cert2.03.34.44.84.5LCE/SRP/PMR12.410.6220.127.116.11NA-qual18.104.22.168.63.6No formal qualification48.646.039.834.833.4Male (% of total employees)68.266.966.266.364.7Married (% of total employees)57.860.559.160.761.5Age (average)31.432.332.232.733.0Employed in trade sector (% total employees)19.121.926.427.727.0Trade Openness and Wage Inequality1123Downloaded by [Moskow State Univ Bibliote] at 04:44 22 October 2013
The trade data were also used to define a dichotomous variable to indicate whether an employee isemployed in those industry sectors most open to international trade. This follows the approach adoptedby Arbache et al. (2004) in which each industry sector is classified to either the trade or non-tradesector depending upon the extent to which it is open to international trade, defined here in terms of thesum of (import penetration + export orientation), a measure used by the Malaysian Ministry ofInternational Trade and Industry. The classification of industry sectors is shown in Table 2. Theoverall impact of trade liberalisation on employment can be seen in Table 1, which shows thatemployment in the trade sector increased from 19.1 per cent in 1984 to 27.0 per cent in 1997.