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Using survey data to assess the distributional effects of trade policy

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Author Info
Guido G. Porto

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Abstract

The author develops and applies a methodology to empirically explore the effects of trade policies on the distribution of income and poverty in developing countries. He uses a methodology based on two links-one connecting trade policies to prices, and another connecting prices to household welfare. The author applies the methodology to the study of the distributional effects of Mercosur on Argentine families. The main finding is that Mercosur benefits the average Argentine household across the entire income distribution. There is evidence of a pro-poor bias of the regional trade agreement: on average, poor households gain more from the reform than middle-income households, whereas the effects on rich families are positive but not statistically significant. Prior to the reform, Argentine trade policy protected the rich over the poor, and after the reform, granted some protection to the poor. As relative pre-Mercosur tariffs are higher on relatively skill-intensive goods, the tariff removals tend to benefit the poor over the rich. These findings indicate that trade reforms may actually help improve the distribution of income and reduce poverty in the country.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3137.

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Date of creation: 01 Sep 2003
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Handle: RePEc:wbk:wbrwps:3137

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Keywords: Labor Policies; Environmental Economics&Policies; Markets and Market Access; Economic Theory&Research; Payment Systems&Infrastructure; Health Economics&Finance; Environmental Economics&Policies; Economic Theory&Research; Markets and Market Access; Access to Markets;

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(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. Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "The Effects of the Colombian Trade Liberalization on Urban Poverty," NBER Chapters, in: Globalization and Poverty, pages 241-290 National Bureau of Economic Research, Inc. [Downloadable!]
    Other versions:
  2. Porto, Guido G., 2004. "Informal export barriers and poverty," Policy Research Working Paper Series 3354, The World Bank. [Downloadable!]
    Other versions:
  3. Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "Distributional Effects of Globalization in Developing Countries," NBER Working Papers 12885, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Lucio Castro & Daniel Saslavsky, 2005. "Trade, Poverty and Employment: The Social Consequences of Integration with China," International Trade 0512017, EconWPA. [Downloadable!]
  5. Thomas W. Hertel, 2006. "A Survey of Findings on the Poverty Impacts of Agricultural Trade Liberalization," The Electronic Journal of Agricultural and Development Economics, Food and Agriculture Organization of the United Nations, vol. 3(1), pages 1-26. [Downloadable!]
  6. Thomas Hertel & Jeffrey Reimer, 2005. "Predicting the poverty impacts of trade reform," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 14(4), pages 377-405, December. [Downloadable!] (restricted)
    Other versions:
  7. Porto, Guido, 2008. "Agro-manufactured export prices, wages and unemployment," Policy Research Working Paper Series 4489, The World Bank. [Downloadable!]
    Other versions:
  8. Krivonos, Ekaterina & Olarreaga, Marcelo, 2005. "Sugar Prices, Labour Income and Poverty in Brazil," CEPR Discussion Papers 5383, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  9. Charles Ackah, & Simon Appleton, . "Food Price Changes and Consumer Welfare in Ghana in the 1990s," Discussion Papers 07/03, University of Nottingham, CREDIT. [Downloadable!]
  10. Sang-Wook (Stanley) Cho & Julian P. Diaz, 2008. "Welfare Impact of Trade Liberalization," Discussion Papers 2008-20, School of Economics, The University of New South Wales. [Downloadable!]
  11. 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)
  12. Vergez, Antonin, 2007. "Agricultural Price Seasonality and Market Failure: Examining the Net Seller Household and the Net Benefit Ratio Definition," 106th Seminar, October 25-27, 2007, Montpellier, France 7911, European Association of Agricultural Economists. [Downloadable!]
  13. Luis San Vicente Portes, 2005. "On the Distributional Effects of Trade Policy: A Macroeconomic Perspective," Computing in Economics and Finance 2005 358, Society for Computational Economics. [Downloadable!]
  14. Porto, Guido G., 2005. "Estimating household responses to trade reforms : net consumers and net producers in rural Mexico," Policy Research Working Paper Series 3695, The World Bank. [Downloadable!]
  15. repec:dia:wpaper:dt200711 is not listed on IDEAS
  16. De Hoyos, Rafael E., 2005. "The Microeconomics of Inequality, Poverty and Market Liberalizing Reforms," Working Papers RP2005/63, World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  17. Brian McCaig, 2009. "Exporting Out of Poverty: Provincial Poverty in Vietnam and U.S. Market Access," ANUCBE School of Economics Working Papers 2009-502, Australian National University, College of Business and Economics, School of Economics. [Downloadable!]
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