Openness and Income Dispaities: Does Trade Explain the 'Mezzogiorno' Effect?
AbstractMany theoretical models show that trade openness has positive welfare implications. Yet, openness might affect different social groups and regions asymmetrically, even within a given country. We use Italian regional data to answer the question whether trade openness affects within-country income differentials. In Italy, the more affluent regions are internationally more open than poorer ones not only with respect to trade in goods, but also with respect to FDI and international migration. Prima facie, there is a positive correlation between openness and per capita income. Studying this relationship empirically requires taking into account the endogenous component of openness. We apply panel cointegration and instrumental variables techniques to account for the endogeneity of trade. Our results show a positive link between trade openness and the level of income per capita.
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Bibliographic InfoPaper provided by Institut für Angewandte Wirtschaftsforschung (IAW) in its series IAW Discussion Papers with number 41.
Length: 39 pages
Date of creation: Jul 2008
Date of revision:
Openness; growth; regional income disparities; Italian regions;
Other versions of this item:
- Claudia Buch & Paola Monti, 2010. "Openness and income disparities: does trade explain the “Mezzogiorno effect”?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 145(4), pages 667-688, January.
- F2 - International Economics - - International Factor Movements and International Business
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-04 (All new papers)
- NEP-INT-2008-11-04 (International Trade)
- NEP-OPM-2008-11-04 (Open Economy Macroeconomic)
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