Endogenous Liberalization and Within-Country Inequality: A Theoretical and Empirical Analysis
We theoretically model and empirically investigate a society’s liberalization decision and its impact on income inequality. The motivation is that a blanket conclusion that globalization increases inequality within countries can be misleading. In the paper, the decision of the society rests on the pre- and post-liberalization utilities of different segments, and, complying with stylized facts, the economy’s structure follows Kuznets’ predictions on industrialization and urbanization. Our findings support the line of research which emphasizes the importance of country-specific factors in prescribing policies. In particular, countries are more likely to open up when relative productivity of migrant ex-rural workers to those of initial urban workers in manufacturing, β, is high, and the society’s tastes for the agricultural goods, α, are not particularly strong. Following liberalization, the income distribution too improves if α is low and β is high. Empirical results show that open economies, ceteris paribus, have 3- 4 higher Gini points than closed economies. In developing countries except Sub-saharan Africa, β can offset this stand-alone effect just after the switch if the switch is made with a minimum β value of 0.67 – 0.89, while in Sub-saharan Africa, this standalone effect can be offset in 10-15 years after the switch. Overall, however, the β effect cannot surpass the stand-alone effect in the whole sample, which implies that the median country has made a “wrong” switch.
|Date of creation:||17 Oct 2005|
|Date of revision:|
|Contact details of provider:|| Postal: 221 Burwood Highway, Burwood 3125|
Phone: 61 3 9244 3815
Fax: +61 3 5227 2655
Web page: http://www.deakin.edu.au/buslaw/aef/index.php
More information through EDIRC
References listed on IDEAS
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.:
- Loren W. Tauer, 1998. "Productivity of New York Dairy Farms Measured by Nonparametric Malmquist Indices," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(2), pages 234-249.
- Skop, E. & Schou, J. S., 1999. "Modeling the effects of agricultural production. An integrated economic and environmental analysis using farm account statistics and GIS," Ecological Economics, Elsevier, vol. 29(3), pages 427-442, June.
- Robert D. Weaver, 1998. "Measuring Productivity of Environmentally Interactive Technologies: The Case of Agriculture and the Environment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 595-599.
- Kwon, Oh Sang & Lee, Hyunok, 2004. "Productivity improvement in Korean rice farming: parametric and non-parametric analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(2), June.
- Carol Newman & Alan Matthews, 2007. "Evaluating the Productivity Performance of Agricultural Enterprises in Ireland using a Multiple Output Distance Function Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 58(1), pages 128-151, 02.
- Robert K. Kaufmann & Seth E. Snell, 1997. "A Biophysical Model of Corn Yield: Integrating Climatic and Social Determinants," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 178-190.
- Drechsler, Martin & Watzold, Frank, 2007. "Ecological-economic modelling for the sustainable use and conservation of biodiversity," Ecological Economics, Elsevier, vol. 62(2), pages 203-206, April.
- Frank M. Gollop & Gregory P. Swinand, 1998. "From Total Factor to Total Resource Productivity: An Application to Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 577-583.
- Meyer-Aurich, Andreas, 2005. "Economic and environmental analysis of sustainable farming practices - a Bavarian case study," Agricultural Systems, Elsevier, vol. 86(2), pages 190-206, November.
- Ewert, Frank & van Ittersum, Martin K. & Bezlepkina, Irina V. & Oude Lansink, Alfons G.J.M. & Andersen, Erling & Brouwer, Floor M. & Flichman, Guillermo & Heckelei, Thomas & Alkan Olsson, Johanna & Ol, 2006. "Methodological concepts for integrated assessment of agricultural and environmental policies in SEAMLESS-IF," Reports 57465, SEAMLESS: System for Environmental and Agricultural Modelling, Linking European Science and Society.
- Clement A. Tisdell, 2014.
in: Handbook of Sustainable Development, chapter 32, pages 517-531
Edward Elgar Publishing.
- Ball, V. Eldon & Lovell, C.A. Knox & Luu, H. & Nehring, Richard F., 2004. "Incorporating Environmental Impacts in the Measurement of Agricultural Productivity Growth," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(03), December.
- Tim Coelli & Ludwig Lauwers & Guido Huylenbroeck, 2007. "Environmental efficiency measurement and the materials balance condition," Journal of Productivity Analysis, Springer, vol. 28(1), pages 3-12, October.
- Carmen Fernandez & Gary Koop & Mark F.J. Steel, 2002.
"Multiple-Output Production With Undesirable Outputs: An Application to Nitrogen Surplus in Agriculture,"
0201001, EconWPA, revised 06 Jan 2002.
- Fernandez C. & Koop G. & Steel M.F.J., 2002. "Multiple-Output Production With Undesirable Outputs: An Application to Nitrogen Surplus in Agriculture," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 432-442, June.
- Carmen Fernandez & Mark F J Steel & Gary Koop, 2002. "Multiple-output production with undesirable output: An application to nitrogen surplus in agriculture," ESE Discussion Papers 34, Edinburgh School of Economics, University of Edinburgh.
- Reinhard, Stijn & Knox Lovell, C. A. & Thijssen, Geert J., 2000. "Environmental efficiency with multiple environmentally detrimental variables; estimated with SFA and DEA," European Journal of Operational Research, Elsevier, vol. 121(2), pages 287-303, March.
- Stijn Reinhard & C.A. Knox Lovell & Geert Thijssen, 1999. "Econometric Estimation of Technical and Environmental Efficiency: An Application to Dutch Dairy Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 44-60.
- Pittman, Russell W, 1983. "Multilateral Productivity Comparisons with Undesirable Outputs," Economic Journal, Royal Economic Society, vol. 93(372), pages 883-91, December.
- Fare, Rolf & Shawna Grosskopf & Mary Norris & Zhongyang Zhang, 1994. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries," American Economic Review, American Economic Association, vol. 84(1), pages 66-83, March.
- Chambers, Robert G. & Fare, Rolf & Grosskopf, Shawna, 1996. "Productivity Growth in APEC Countries," Working Papers 197843, University of Maryland, Department of Agricultural and Resource Economics.
- Udo Ebert & Heinz Welsch, 2007. "Environmental Emissions and Production Economics: Implications of the Materials Balance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(2), pages 287-293.
- Fare, Rolf, et al, 1989. "Multilateral Productivity Comparisons When Some Outputs Are Undesirable: A Nonparametric Approach," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 90-98, February.
- Just, Richard E & Antle, John M, 1990. "Interactions between Agricultural and Environmental Policies: A Conceptual Framework," American Economic Review, American Economic Association, vol. 80(2), pages 197-202, May.
- Lansink, Alfons Oude & Reinhard, Stijn, 2004. "Investigating technical efficiency and potential technological change in Dutch pig farming," Agricultural Systems, Elsevier, vol. 79(3), pages 353-367, March.
When requesting a correction, please mention this item's handle: RePEc:dkn:econwp:eco_2005_18. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dr Xueli Tang)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.