Sticking to the topic of inequality, there's a good paper by Rana Hasan and Karl Robert Jandoc (the former my mentor and the latter a former colleague) published by the University of the Philippines School of Economics. Entitled "Trade Liberalization and Wage Inequality in the Philippines," the paper examines the role of trade liberalization in accounting for increasing wage inequality in the Philippines from 1994 to 2000—a period over which trade protection declined and inequality increased dramatically.
Now this result of increasing openness to trade and at the same time increasing inequality is much like the case in India, and is consistent with a growing body of literature that has found trade liberalization to lead to increases in inequality.
But the interesting thing is, at least for the Philippines, Hasan and Jandoc actually found little evidence to suggest that trade liberalization itself had an important role played in increasing inequality. More specifically, "the effect of trade on industry wage premia and industry-specific skill premia were found to account for very little of the increase in wage inequality." Instead, most of the "trade-induced" increases in inequality were captured by the "employment reallocation effects" of trade. In particular, "reductions in protection appear to have led to shift in employment to more protected sectors, especially services where wage inequality tends to be high to begin with and increased still further."
Now that is interesting: opening the economy to trade resulted in laborers moving to more protected industries. How did that happen? Hasan and Jandoc did not provide explanations and suggested to other economists for future work. I would guess that the answer is already there. Laborers go to where higher wages are. Never mind for the moment that between the three primary sectors of the economy, the services sectors give the highest wages. Even if we consider it generally, the benefits of opening an industry to international trade is lower prices in the products. Even after considering economies of scale, chances are, lower prices of goods would mean lower wages for workers.
Naturally, what else can you do? If you find the guy across the block is earning more working for another firm, you'd want to join him working for that firm.
Although granted that the study only limits to the country of the Philippines, it would be interesting to know if other countries exhibit these effects of trade liberalization on labor mobility.