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The Impact of Trade on Inequality in Developing Countries

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  • Pavcnik, Nina

Abstract

This paper assesses the current state of evidence on how international trade shapes inequality and poverty through its influence on earnings and employment opportunities. While the focus is mainly on developing countries, in part because we have more evidence in that context, the discussion draws parallels to the empirical evidence from developed countries. The paper also discusses perceptions about international trade in over 40 countries at different levels of development, including perceptions on trade's overall benefits for the economy, trade's effect on the livelihood of workers through wages and jobs, and trade's contribution to inequality. The paper concludes with a survey of evidence on several policies that could mitigate the adverse effects of import competition.

Suggested Citation

  • Pavcnik, Nina, 2017. "The Impact of Trade on Inequality in Developing Countries," CEPR Discussion Papers 12331, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12331
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    More about this item

    Keywords

    inequality; Informality; Local Labor Markets; poverty; trade policy;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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