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Recent perspectives on trade and inequality

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Author Info

  • Harrison, Ann
  • McLaren, John
  • McMillan, Margaret

Abstract

The 1990's dealt a blow to traditional Heckscher-Ohlin analysis of the relationship between trade and income inequality, as it became clear that rising inequality in low-income countries and other features of the data were inconsistent with that model. As a result, economists moved away from trade as a plausible explanation for rising income inequality. In recent years, however, a number of new mechanisms have been explored through which trade can affect(and usually increase) income inequality. These include within-industry effects due to heterogeneous?firms; effects of offshoring of tasks; effects on incomplete contracting; and effects of labor-market frictions. A number these mechanisms have received substantial empirical support.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5754.

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Date of creation: 01 Aug 2011
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Handle: RePEc:wbk:wbrwps:5754

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Keywords: Labor Markets; Economic Theory&Research; Labor Policies; Trade Policy; Emerging Markets;

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References

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Citations

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Cited by:
  1. Richard G. Harris & Peter Robertson, 2009. "Trade, Wages And Skill Accumulation In The Emerging Giants," Economics Discussion / Working Papers 09-19, The University of Western Australia, Department of Economics.
  2. Facundo Alvaredo & Leonardo Gasparini, 2013. "Recent Trends in Inequality and Poverty in Developing Countries," CEDLAS, Working Papers 0151, CEDLAS, Universidad Nacional de La Plata.
  3. Daniel Baumgarten, 2010. "Exporters and the Rise in Wage Inequality – Evidence from German Linked Employer-Employee Data," Ruhr Economic Papers 0217, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  4. Bonfatti, Roberto & Ghatak, Maitreesh, 2013. "Trade and the allocation of talent with capital market imperfections," Journal of International Economics, Elsevier, vol. 89(1), pages 187-201.
  5. Guerriero, Marta & Sen, Kunal, 2012. "What Determines the Share of Labour in National Income? A Cross-Country Analysis," IZA Discussion Papers 6643, Institute for the Study of Labor (IZA).
  6. Fenske, James, 2010. "Ecology, trade and states in pre-colonial Africa," MPRA Paper 27203, University Library of Munich, Germany.
  7. Priya Ranjan, 2012. "Offshoring, Unemployment, and Wages: The Role of Labor Market Institutions," Working Papers 121302, University of California-Irvine, Department of Economics.
  8. Robert A. Blecker, 2012. "Stolper-Samuelson Revisited: Trade and Distribution with Oligopolistic Profits," Working Papers 2012-06, American University, Department of Economics.
  9. Lederman, Daniel, 2011. "International trade and inclusive growth : a primer for busy policy analysts," Policy Research Working Paper Series 5886, The World Bank.

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