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The Impact of Trade Liberalisation on Household Welfare in a Developing Country with Imperfect Labour Markets

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  • Ganesh K. Seshan

Abstract

I develop an empirical methodology to assess the distributional impact of trade-induced price shocks when labour markets are imperfect. The proposed methodology relates exogenous variations in prices to changes in household welfare using a separable agricultural household model that flexibly allows the data to determine the degree of labour market imperfections. Applying this approach to Vietnam, I investigate the impact of agriculture trade liberalisation between 1993 and 1998 on overall household welfare, measured using per capita household expenditure. I find that accounting for labour market imperfections results in welfare gains that are nearly four times larger than those found when assuming complete labour markets.

Suggested Citation

  • Ganesh K. Seshan, 2014. "The Impact of Trade Liberalisation on Household Welfare in a Developing Country with Imperfect Labour Markets," Journal of Development Studies, Taylor & Francis Journals, vol. 50(2), pages 226-243, February.
    • Handle: RePEc:taf:jdevst:v:50:y:2014:i:2:p:226-243
    DOI: 10.1080/00220388.2013.833324
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    3. 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.
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    Cited by:

    1. Devashish Mitra, 2019. "Responses to Trade Opening: Evidence and Lessons from Asia," Working Papers id:12977, eSocialSciences.
    2. Peter Brummund & Joshua D. Merfeld, 2022. "Should farmers farm more? Comparing marginal products within Malawian households," Agricultural Economics, International Association of Agricultural Economists, vol. 53(2), pages 289-306, March.
    3. Han, Jun & Liu, Runjuan & Ural Marchand, Beyza & Zhang, Junsen, 2016. "Market structure, imperfect tariff pass-through, and household welfare in Urban China," Journal of International Economics, Elsevier, vol. 100(C), pages 220-232.
    4. Thang T. Vo & Dinh X. Nguyen, 2021. "Impact of Trade Liberalization on Household Welfare: An Analysis Using Household Exposure-to-Trade Indices," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 153(2), pages 503-531, January.

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