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Impact of International Trade on Income and Income Inequality

Author

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  • Aradhyula, Satheesh V.
  • Rahman, Tauhidur
  • Seenivasan, Kumaran

Abstract

The impact of international trade on the level and distribution of income has been the field of focus in international economics. There have been empirical studies supporting and opposing trade openness but most of the studies drew the results from cross sectional data. In this study, we use panel data to investigate the trade's impact on levels and distribution of income. Analysis of a balanced panel of country level data revealed that trade openness increases income. Results using an unbalanced panel data set revealed that trade openness increases income inequality in the overall sample but when we split the sample in to two groups, trade increases inequality in developing countries but it reduces inequality in developed countries though the coefficient is not statistically significant.

Suggested Citation

  • Aradhyula, Satheesh V. & Rahman, Tauhidur & Seenivasan, Kumaran, 2007. "Impact of International Trade on Income and Income Inequality," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 9999, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea07:9999
    DOI: 10.22004/ag.econ.9999
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    Cited by:

    1. Ngwen Ngangu¨¦, 2020. "Financial Sector Development and Open Economy for Income Inequality Reduction: A Panel Fixed Model Analysis," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 12(4), pages 1-33, April.
    2. Huy Quang Doan, 2019. "Trade, Institutional Quality and Income: Empirical Evidence for Sub-Saharan Africa," Economies, MDPI, vol. 7(2), pages 1-23, May.
    3. Uddin, Md. Nezum, 2020. "Bangladesh: Income Inequality and Globalization," Asian Business Review, Asian Business Consortium, vol. 10(1), pages 43-52.
    4. Raymond Kofi Adjei & Veronika Kajurová, 2021. "What Affects Income in Sub-Saharan Africa?," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 7(2), pages 223-237.
    5. Munem Ahmad Chowdhury & Hafsa Rahman Nijhum & Kazi Mohammed Kamal Uddin, 2021. "Disintegrated Impact of Trade Openness on Income Inequality: Empirical Evidence from Bangladesh," Business and Economic Research, Macrothink Institute, vol. 11(3), pages 1-18, December.
    6. Ogundari, Kolawole, 2021. "Effect of Trade on Income Inequality in sub-Saharan Africa: A note," MPRA Paper 110200, University Library of Munich, Germany.
    7. Huang, Kaixing & Yan, Wenshou & Sim, Nicholas & Guo, Yuqing & Xie, Fang, 2022. "Can trade explain the rising trends in income inequality? Insights from 40 years of empirical studies," Economic Modelling, Elsevier, vol. 107(C).
    8. Bukhari, Mahnoor & Munir, Kashif, 2016. "Impact of Globalization on Income Inequality in Selected Asian Countries," MPRA Paper 74248, University Library of Munich, Germany.

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    Keywords

    International Relations/Trade;

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