Trade Policy and the Household Distribution of Income

Joseph Francois and Hugo Rojas-Romagosa

No 331245, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: We explore the relationship between import protection and the household distribution of income. We first develop a general-equilibrium mapping from tariffs to household inequality measures. This also yields predictions for linkages between tariffs, development level, and observed household inequality. Working with a new dataset, we then examine crosscountry variation in inequality with respect to import protection. Results are consistent with predictions of the factor-intensity model of trade. Regression results suggest that import protection makes income distribution worse for countries in labor-intensive diversification cones. This relationship shifts to one of falling inequality as incomes rise and we move to capital-intensive diversification cones.

Keywords: International Relations/Trade; Consumer/Household Economics (search for similar items in EconPapers)
Pages: 26
Date: 2004
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Working Paper: Trade Policy and the Household Distribution of Income (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:331245

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