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Factor Immobility and Regional Impacts of Trade Liberalization Evidenceon Poverty From India

Petia Topalova

No 10/218, IMF Working Papers from International Monetary Fund

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.

Keywords: Protectionism; Private consumption; Poverty; Fiscal reforms; Income distribution; India; International trade; Nontariff barriers; Trade policy; Trade liberalization; Tariffs; Tariff, tariff cuts, trade protection, trade reforms, Measurement and Analysis of Poverty, Economic Development: Regional, Urban, and Rural Analyses, (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cwa, nep-dev and nep-int
Date: 2010-09-01
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