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Opennes, Inequality, and Poverty: Endowments Matter

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Author Info
Julien Gourdon () (The World Bank, University of Auvergne and CERDI)
Nicolas Maystre () (University of Geneva)
Jaime de Melo () (University of Geneva, CERDI and CEPR)

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Abstract

Using tariffs as a measure of openness, this paper finds consistent evidence that the conditional effects of trade liberalization on inequality are correlated with relative factor endowments. Trade liberalization, measured by changes in tariff revenues, is associated with increases in inequality in countries well-endowed in highly skilled workers and capital or with workers that have very low education levels. Similar, though less robust, results are also obtained when decile data are used instead of the usual Gini coefficients. Taken together, the results are strongly supportive of the factor-proportions theory of trade and suggest that trade liberalization in poor countries where the share of the labor force with little education is high raises inequality. Simulation results also suggest that relatively small changes in inequality as measured by aggregate measures of inequality like the Gini coefficient are magnified when estimates are carried out using decile data.

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Publisher Info
Paper provided by Centro Studi Luca d\'Agliano, University of Milano in its series Development Working Papers with number 239.

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Length: 49
Date of creation: 07 Jan 2008
Date of revision:
Handle: RePEc:csl:devewp:239

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Related research
Keywords: International Trade; Income Distribution; Poverty;

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Find related papers by JEL classification:
F11 - International Economics - - Trade - - - Neoclassical Models of Trade
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
D3 - Microeconomics - - Distribution

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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    Other versions:
  2. Barro, Robert J, 2000. " Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March. [Downloadable!] (restricted)
  3. Isabelle Bensidoun & Sebastien Jean & Aude Sztulman, 2005. "International Trade and Income Distribution: Reconsidering the Evidence," Working Papers 2005-17, CEPII research center. [Downloadable!]
  4. Angus Deaton, 2005. "Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 1-19, 04. [Downloadable!] (restricted)
    Other versions:
  5. Pritchett, Lant, 2000. "Understanding Patterns of Economic Growth: Searching for Hills among Plateaus, Mountains, and Plains," World Bank Economic Review, Oxford University Press, vol. 14(2), pages 221-50, May. [Downloadable!]
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    Other versions:
  7. Pinelopi K. Goldberg & Nina Pavcnik, 2004. "Trade, Inequality, and Poverty: What Do We Know? Evidence from Recent Trade Liberalization Episodes in Developing Countries," NBER Working Papers 10593, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Xu, Bin, 2003. "Trade liberalization, wage inequality, and endogenously determined nontraded goods," Journal of International Economics, Elsevier, vol. 60(2), pages 417-431, August. [Downloadable!] (restricted)
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  12. Nicita, Alessandro, 2004. "Who benefited from trade liberalization in Mexico? Measuring the effects on household welfare," Policy Research Working Paper Series 3265, The World Bank. [Downloadable!]
  13. Galiano, Sebastian & Porto, Guido G., 2006. "Trends in tariff reforms and trends in wage inequality," Policy Research Working Paper Series 3905, The World Bank. [Downloadable!]
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  17. Adrian Wood, 2002. "Globalization and wage inequalities: A synthesis of three theories," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(1), pages 54-82, March. [Downloadable!] (restricted)
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  20. Spilimbergo, Antonio & Londono, Juan Luis & Szekely, Miguel, 1999. "Income distribution, factor endowments, and trade openness," Journal of Development Economics, Elsevier, vol. 59(1), pages 77-101, June. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Elena Meschi & Marco Vivarelli, 2007. "Globalization and Income Inequality," IZA Discussion Papers 2958, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Stephen Dobson & Carlyn Ramlogan, 2008. "Is there an openness Kuznets curve? Evidence from Latin America," Working Papers 2008/10, Nottingham Trent University, Nottingham Business School, Economics Division. [Downloadable!]
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