Policy Reform and Income Distribution
The paper analyses the relationship between within-country income inequality and policies of domestic liberalization and external globalization. The models used to provide the rationale for such reforms—such as the Hecksher-Ohlin model—usually predict a decline in inequality. However, the evidence shows that inequality often rose with the introduction of such reforms. The paper tries to explain this discrepancy by identifying the conditions under which the models’ conclusions do not hold. Indeed, such models are based on a simplified view of reality and restrictive assumptions, and their predictions do not necessarily hold in conditions of institutional weakness, structural rigidities, inefficient markets, asymmetric information and persistent protectionism.
|Date of creation:||Oct 2005|
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|Contact details of provider:|| Web page: http://www.un.org/en/development/desa/working-papers.html|
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- Li, Hongyi & Squire, Lyn & Zou, Heng-fu, 1998.
"Explaining International and Intertemporal Variations in Income Inequality,"
Royal Economic Society, vol. 108(446), pages 26-43, January.
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"Impacts of the Indonesian Economic Crisis: Price Changes and the Poor,"
William Davidson Institute Working Papers Series
249, William Davidson Institute at the University of Michigan.
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"Inequality Among World Citizens: 1820-1992,"
American Economic Review,
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"Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras,"
Journal of International Economics,
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"Income distribution, development and foreign trade : A cross-sectional analysis,"
European Economic Review,
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- Savvides, Andreas, 1998. "Trade policy and income inequality: new evidence," Economics Letters, Elsevier, vol. 61(3), pages 365-372, December.
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