This volume examines the relationship between trade liberalization policies and income inequality in developing countries. Using survey data for 54 developing countries, the book explores the potential trade-off between the gains from trade and the distribution of those gains and provides a quantification of the inequality-adjusted welfare gains from trade.
The book begins with an introduction to the model and its methodology. Chapter 2 sets up the model and derives the formulas for the welfare effects of trade policy. Chapter 3 uses the tariff data and the survey data to estimate those welfare effects in 54 countries. Chapter 4 discusses the gains from trade and their distribution. Chapter 5 evaluates and quantifies the trade-off between income gains and inequality costs of trade. Chapter 6 presents robustness tests and results from alternative models of the impacts of trade. The last chapter reviews the Household Impacts of Trade database and dashboard, which provides data for replication and a platform that allows researchers to simulate agricultural tariff policy shocks.
Providing a comprehensive empirical analysis of the effects of trade policy on inequality in developing countries, this volume will be of interest to researchers and students of economic inequality, development, and international trade as well as policymakers interested in the inequality and poverty consequences of trade policy.
Author(s): Erhan Artuc, Guido Porto, Bob Rijkers
Series: Economic Studies in Inequality, Social Exclusion and Well-Being
Publisher: Springer
Year: 2022
Language: English
Pages: 157
City: Cham
Preface
Acknowledgments
Contents
1 Introduction
2 An Agricultural Household Model with Tariffs
2.1 General Formulation
2.1.1 Household Welfare
2.1.2 The Impacts of Tariff Changes
2.2 A Baseline Model
3 Data and Estimation
3.1 The Household Surveys
3.2 Harmonization
3.3 Trade Policy and Price Changes
3.4 Expenditure and Income Shares
3.5 Labor Income in the Baseline Model
3.6 Transfers
4 Income Gains and Inequality Costs
4.1 Income Gains from Trade
4.1.1 Sources of Gains from Trade
4.1.2 The Gender Bias of Trade
4.2 The Distributional Effects of Trade
4.2.1 Countries with Pro-poor Bias
4.2.2 Countries with Pro-rich Bias
4.3 Worldwide Gains
5 The Trade-Off
5.1 No Trade-off Countries
5.2 Trade-off Countries without Trade Policy Preference Reversals
5.3 Trade-off Countries with Trade Policy Preference Reversals
5.4 Assessment
5.5 Underlying Factors: Expenditure and Income Household Heterogeneity
6 Alternative Models
6.1 Models of Labor Markets
6.1.1 No Labor Markets
6.1.2 Imperfectly Mobile Labor
Production Functions
Workers' Choices
Equilibrium
Calibration at the Steady State
Trade Shock Simulations
First Order Welfare Effects
Wage and Non-traded Price Responses to Trade Shocks
6.2 Models of Income Tax Redistribution
6.2.1 No Revenue Loss
6.2.2 Income Tax Progressivity
6.3 The Gains from Trade
6.4 The Trade-offs
7 HIT: Household Impacts of Trade
7.1 The Household Impacts of Tariff Database
7.2 Agricultural Tariff Liberalization
8 Conclusions
Bibliography
