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Trade Policy and the Household Distribution of Income

Joseph Francois and Hugo Rojas-Romagosa ()

No 4436, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 cross-country 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 labour-intensive diversification cones. This relationship shifts to one of falling inequality as incomes rise and we move to capital-intensive diversification cones.

Keywords: atkinson index; distribution of income; gini coefficient; globalization; inequality; tariffs; trade (search for similar items in EconPapers)
JEL-codes: D31 F13 O15 (search for similar items in EconPapers)
Date: 2004-06
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