Working Paper: NBER ID: w23878
Authors: Nina Pavcnik
Abstract: This paper assesses the current state of evidence on how international trade shapes inequality and poverty through its influence on earnings and employment opportunities. While the focus is mainly on developing countries, in part because we have more evidence in that context, the discussion draws parallels to the empirical evidence from developed countries. The paper also discusses perceptions about international trade in over 40 countries at different levels of development, including perceptions on trade’s overall benefits for the economy, trade’s effect on the livelihood of workers through wages and jobs, and trade’s contribution to inequality. The paper concludes with a survey of evidence on several policies that could mitigate the adverse effects of import competition.
Keywords: trade; inequality; poverty; developing countries; employment opportunities
JEL Codes: F1; F13; F14; F16; J2; J46; O17; O24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased international trade (F10) | reallocation of jobs and resources (J68) |
| increased international trade (F10) | worker earnings (J31) |
| trade influences worker earnings (F16) | industry affiliation (L89) |
| trade influences worker earnings (F16) | firm performance (L25) |
| trade influences worker earnings (F16) | geographic location (R12) |
| trade liberalization in developing countries (F63) | increased earnings for better-educated workers (J24) |
| trade liberalization in developing countries (F63) | decreased earnings for less-educated workers (F66) |
| adverse effects of trade on local labor markets (F66) | negative impacts on earnings and employment (F66) |
| negative impacts on earnings and employment (F66) | magnify over time (D25) |
| increased international trade (F10) | winners and losers within countries (F61) |