Factor Immobility and Regional Impacts of Trade Liberalization: Evidence on Poverty from India

Petia Topalova

American Economic Journal: Applied Economics, 2010, vol. 2, issue 4, 1-41

Abstract: This paper uses the 1991 Indian trade liberalization to measure the impact of trade liberalization on poverty, and to examine the mechanisms underpinning this impact. Variation in sectoral composition across districts and liberalization intensity across production sectors allows a difference-in-difference approach. Rural districts, in which production sectors more exposed to liberalization were concentrated, experienced slower decline in poverty and lower consumption growth. The impact of liberalization was most pronounced among the least geographically mobile at the bottom of the income distribution, and in Indian states where inflexible labor laws impeded factor reallocation across sectors. (JEL F13, I32, O15, O18, O19, O24)

JEL-codes: F13 I32 O15 O18 O19 O24 (search for similar items in EconPapers)
Date: 2010
Note: DOI: 10.1257/app.2.4.1
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Citations: View citations in EconPapers (525)

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