Trade Policy and the Household Distribution of Income
AbstractWe explore the relationship between import protection and the household distribution of income. We first develop a general-equilibrium mapping from tariffs to household inequality measures. This also yields predictions for linkages between tariffs, development level, and observed household inequality. Working with a new dataset, we then examine cross-country variation in inequality with respect to import protection. Results are consistent with predictions of the factor-intensity model of trade. Regression results suggest that import protection makes income distribution worse for countries in labour-intensive diversification cones. This relationship shifts to one of falling inequality as incomes rise and we move to capital-intensive diversification cones.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4436.
Date of creation: Jun 2004
Date of revision:
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Other versions of this item:
- J. Francois & H. Rojas-Romagosa, 2004. "Trade Policy and the Household Distribution of Income," Tinbergen Institute Discussion Papers 04-051/2, Tinbergen Institute, revised 15 Jun 2004.
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
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