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Did Trade Openness Affect Income Distribution in Latin America? Evidence for the years 1980.2010

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  • Szekely, Miguel
  • Samano, Claudia

Abstract

This paper offers a medium-term perspective for analysing the trade openness.inequality relationship in Latin America. We present three contributions. The first is that we assemble a database on income distribution indicators systematically estimated from household surveys with emphasis on within-country consistency of methodology, definitions, and coverage for the years 1980-2010. This 30-year database allows observing clearly that the increases in inequality throughout the 1980s and 1990s decades have been almost totally counteracted by the improvements during the first 10 years of the twenty-first century: 75 per cent of the deterioration in income distribution was reversed in the first decade of 2000. The second is an estimation of the association between trade openness and income distribution over the 30-year period. Our central conclusion in this regard is that greater trade openness is associated with contemporaneous increases in inequality in the region. The third is that trade openness contributed..together with other factors..to the increase in inequality during the 1980s and 1990s, but once fully implemented, it did not lead to further rises in inequality, and did not represent a permanent obstacle to improvements in income distribution triggered by other factors such as greater education levels across the population.

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File URL: http://www.wider.unu.edu/stc/repec/pdfs/wp2012/wp2012-003.pdf
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Bibliographic Info

Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number UNU-WIDER Research Paper WP2012/03.

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Length: 36
Date of creation: 2012
Date of revision:
Handle: RePEc:unu:wpaper:wp2012-03

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Keywords: inequality; education; trade;

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  1. Gordon H. Hanson, 2003. "What Has Happened to Wages in Mexico since NAFTA?," NBER Working Papers 9563, National Bureau of Economic Research, Inc.
  2. de Hoyos, Rafael & Lustig, Nora, 2009. "Apertura comercial, desigualdad y pobreza. Reseña de los enfoques metodológicos, el estado del conocimiento y la asignatura pendiente," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(302), pages 283-328, abril-jun.
  3. Thomas Hertel & Jeffrey Reimer, 2005. "Predicting the poverty impacts of trade reform," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(4), pages 377-405.
  4. Attanasio, Orazio & Goldberg, Pinelopi K. & Pavcnik, Nina, 2004. "Trade reforms and wage inequality in Colombia," Journal of Development Economics, Elsevier, vol. 74(2), pages 331-366, August.
  5. Eduardo Lora, 2001. "Las Reformas Estructurales en América Latina: Qué Se Ha Reformado y Cómo Medirlo," IDB Publications 7638, Inter-American Development Bank.
  6. Peter H. Lindert & Jeffrey G. Williamson, 2001. "Does Globalization Make the World More Unequal?," NBER Working Papers 8228, National Bureau of Economic Research, Inc.
  7. Antonio Spilimbergo & Juan Luis Londoño & Miguel Székely, 1997. "Income Distribution, Factor Endowments, and Trade Openness," Research Department Publications 4088, Inter-American Development Bank, Research Department.
  8. Ferreira, Francisco H. G. & Leite, Phillippe G. & Wai-Poi, Matthew, 2007. "Trade liberalization, employment flows, and wage inequality in Brazil," Policy Research Working Paper Series 4108, The World Bank.
  9. Giovanni Andrea Cornia, 2010. "Income Distribution under Latin America's New Left Regimes," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 11(1), pages 85-114.
  10. Manoj Atolia, 2002. "Trade Liberalization and Rising Wage Inequality in Latin America: Reconciliation with HOS Theory," Working Papers wp2002_03_01, Department of Economics, Florida State University, revised Feb 2006.
  11. Guido G. Porto, 2007. "Globalisation and Poverty in Latin America: Some Channels and Some Evidence," The World Economy, Wiley Blackwell, vol. 30(9), pages 1430-1456, 09.
  12. Giovanni Andrea Cornia, 2011. "Economic Integration, Inequality and Growth: Latin America vs. the European economies in transition," Working Papers 101, United Nations, Department of Economics and Social Affairs.
  13. De Hoyos, Rafael E., 2005. "The Microeconomics of Inequality, Poverty and Market Liberalizing Reforms," Working Paper Series RP2005/63, World Institute for Development Economic Research (UNU-WIDER).
  14. 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.
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