Working Paper: NBER ID: w10593
Authors: Pinelopi Koujianou Goldberg; Nina Pavcnik
Abstract: We review the empirical evidence on the relationship between Trade Liberalization, Inequality, and Poverty based on the analysis of micro data from several developing countries that underwent significant trade reforms in recent years. Despite many measurement and identification difficulties, and despite conflicting evidence on some issues, empirical work based on country case studies' has established certain patterns that seem common across countries and trade liberalization episodes, and may hence be informative as to how developing countries adjust to trade reform.
Keywords: trade liberalization; inequality; poverty; developing countries; microdata
JEL Codes: F13; F14; F16; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Trade liberalization (F13) | Increased wage inequality (J31) |
| Tariff reductions (F13) | Increased wage inequality (J31) |
| Trade liberalization (F13) | Expansion of the informal sector (O17) |
| Expansion of the informal sector (O17) | Exacerbation of overall inequality (F62) |
| Trade liberalization (F13) | Changes in income distribution (D31) |
| Trade liberalization (F13) | Changes in poverty levels (I32) |
| Tariff reductions (F13) | Changes in income distribution (D31) |
| Tariff reductions (F13) | Changes in poverty levels (I32) |
| Trade liberalization (F13) | Increased skill premiums (J24) |
| Increased skill premiums (J24) | Increased wage disparities (J31) |
| Trade liberalization (F13) | Decreased poverty in absolute terms (I32) |
| Trade liberalization (F13) | Complicated relationship with poverty for rural vs urban populations (R29) |