The present study analyses the impact of direction of trade on wage inequality in Indian economy and therefore attempts to empirically test the validity of the HO-SS (Heckscher-Ohlin-Stopler-Samuelson) theorem and the model given by Davis (1996). This study employs different specifications of semi log linear multiple regression model for the analysis. To minimize the problem of multicollinearity, principal component analysis has been used. The empirical result of the present study rejects the proposition of both the models. In other words India's trade with developed and developing countries leads to increase in wage inequality.
Available at: http://works.bepress.com/aviral_kumar_tiwari/8/