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Trade Policy and the Household Distribution of Income

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Author Info
J. Francois () (Faculty of Economics, Erasmus Universiteit Rotterdam, and CEPR)
H. Rojas-Romagosa () (Faculty of Economics, Erasmus Universiteit Rotterdam)

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Abstract

We 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 crosscountry 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 labor-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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Publisher Info
Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 04-051/2.

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Date of creation: 04 May 2004
Date of revision: 15 Jun 2004
Handle: RePEc:dgr:uvatin:20040051

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Web page: http://www.tinbergen.nl/

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Related research
Keywords: trade inequality distribution of income Atkinson index Gini coefficient globalization tariffs

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Find related papers by JEL classification:
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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    Other versions:
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    Other versions:
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    Other versions:
  15. Burgess, David F, 1976. "Tariffs and Income Distribution: Some Empirical Evidence for the United States," Journal of Political Economy, University of Chicago Press, vol. 84(1), pages 17-45, February. [Downloadable!] (restricted)
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