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Trade and US Inequality in the Tokyo Round

Author

Listed:
  • Andrew Greenland
  • James Lake
  • John Lopresti

Abstract

Against a backdrop of sharply rising inequality, the Tokyo Round of the GATT resulted in a 1.6 percentage point reduction in average US tariffs – larger than CUSFTA, NAFTA, and the liberalization accompanying the granting of PNTR to China. We construct a novel IV based on the so-called “Swiss formula” that governed the Tokyo Round tariff liberalization to provide evidence of its effects on imports and inequality. Instrumented tariff reductions explain approximately 20% of the rise in income inequality between non-production and production workers between 1979 and 1988. This effect is largest among women, workers in routine occupations, and workers in more technology-intensive industries, suggesting a complementarity between trade liberalization and skill-biased technological change.

Suggested Citation

  • Andrew Greenland & James Lake & John Lopresti, 2026. "Trade and US Inequality in the Tokyo Round," NBER Working Papers 34785, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34785
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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor

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