Trade Openness and Income Inequality: Fresh Evidence Based on Different Inequality Measures

Noor Ahmed Khoso (), Sheraz Rajput, Tariq Aziz (), Akseer Hussain and Agha Jahanzeb
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Noor Ahmed Khoso: Department of Business Administration, Sukkur IBA University, Pakistan, Postal: Airport Road, Sukkur Sindh, Pakistan
Sheraz Rajput: Department of Business Administration, Sukkur IBA University, Pakistan
Akseer Hussain: Department of Business Administration, Sukkur IBA University, Pakistan
Agha Jahanzeb: Department of Business Administration, Sukkur IBA University, Pakistan

Asian Journal of Applied Economics/ Applied Economics Journal, 2021, vol. 28, issue 2, 63-81

Abstract: Theoretical and empirical literature on the impact of trade openness on income inequality is inconclusive. The inconsistent findings may be partly the result of biased measures of income inequality and divergent data sources. This paper improves upon the previous literature by examining the impact of trade openness on income inequality, using data from three major data sources: the Standardized World Income Inequality Database (SWIID), including disposable and market income; World Development Indicators(WDI); and the University of Texas Inequality Project (UTIP); as well as four Gini coefficients as measures of inequality. We apply a two-step system GMM estimation technique and the findings suggest a negative relationship between trade openness and income inequality. Based on the empirical results, we conclude that changing the measure of inequality from different data sources does not affect the empirical results related to the trade-inequality relationship.

Keywords: income inequality; trade openness; Gini coefficient; two-step GMM (search for similar items in EconPapers)
JEL-codes: D63 F14 F15 F63 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Asian Journal of Applied Economics/ Applied Economics Journal

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Journal Article: Trade Openness and Income Inequality: Fresh Evidence Based on Different Inequality Measures (2021)
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