Distributional Effects of Deep Trade Agreements: Evidence from South Korea

Abstract This study empirically examines the impact of deep trade agreements on wages amid increasing non-tariff measures in global trade. Using Two-Stage Least Squares, we analyze how specific provisions in deep trade agreements affect trade and, subsequently, how trade influences wages across occupational categories in Korea. Our findings show that Transparency, SPS , and GATS provisions enhance trade, while Export Taxes, TBT, STE, AD , Public Procurement, and TRIM s provisions reduce it. Deep trade agreements may increase wage inequality, with director-level positions uniquely affecting wage growth. This research offers insights for policymakers considering market access reinforcement in trade agreements. As the first empirical analysis using South Korean data, this study addresses a significant research gap, contributing to a comprehensive understanding of how deep trade agreements impact wages in the context of evolving global trade dynamics.