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Trade Policy and the Household Distribution of Income

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  • J. Francois

    ()
    (Faculty of Economics, Erasmus Universiteit Rotterdam, and CEPR)

  • H. Rojas-Romagosa

    ()
    (Faculty of Economics, Erasmus Universiteit Rotterdam)

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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Bibliographic 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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Related research

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

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  1. 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.
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  10. Matthew Higgins & Jeffrey G. Williamson, 1999. "Explaining Inequality the World Round: Cohort Size, Kuznets Curves, andOpenness," NBER Working Papers 7224, National Bureau of Economic Research, Inc.
  11. Mussa, Michael, 1979. "The two-sector model in terms of its dual : A geometric exposition," Journal of International Economics, Elsevier, vol. 9(4), pages 513-526, November.
  12. Barro, Robert J, 2000. " Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
  13. Ethier, Wilfred J., 1982. "The general role of factor intensity in the theorems of international trade," Economics Letters, Elsevier, vol. 10(3-4), pages 337-342.
  14. Dollar, David & Kraay, Aart, 2001. "Growth is good for the poor," Policy Research Working Paper Series 2587, The World Bank.
  15. Thomas W. Hertel & Paul V. Preckel & John A.L. Cranfield & Maros Ivanic, 2003. "Multilateral Trade Liberalization and Poverty in Brazil and Chile," Economie Internationale, CEPII research center, issue 94-95, pages 201-233.
  16. Anthony B. Atkinson & Andrea Brandolini, 2000. "Promise and Pitfalls in the Use of 'Secondary' Data-Sets: Income Inequality in OECD Countries," Temi di discussione (Economic working papers) 379, Bank of Italy, Economic Research and International Relations Area.
  17. L. Alan Winters & Neil McCulloch & Andrew McKay, 2004. "Trade Liberalization and Poverty: The Evidence So Far," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 72-115, March.
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Cited by:
  1. Hugo Rojas-Romagosa & J.F. Francois, 2008. "Reassessing the relationship between inequality and development," CPB Discussion Paper 107, CPB Netherlands Bureau for Economic Policy Analysis.
  2. Joseph Francis Francois & Hugo ROJAS-ROMAGOSA, 2008. "Equity and International Trade," Economics working papers 2008-14, Department of Economics, Johannes Kepler University Linz, Austria.
  3. Joseph Francois & Hugo Rojas-Romagosa, 2007. "Equity and Trade Policy," IIDE Discussion Papers 20070501, Institue for International and Development Economics.

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