Trade and Inequality: Impact on Spanish Regional Income Distributions

Ignacio Pineda-Devesa () and Joan Martín-Montaner
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Ignacio Pineda-Devesa: Department of Finance and Accounting, Universitat Jaume I, Castellón, Spain

No 2024/09, Working Papers from Economics Department, Universitat Jaume I, Castellón (Spain)

Abstract: This paper studies the relationship between trade openness and income inequality at a regional level. Trade models predict that the expected benefits of trade are not necessarily distributed equally across the population within a country. Most research on the impact of trade on income distribution has focused solely on the impact of import flows at the national level. Using data from income surveys and trade at the shipment level, we estimate a 2SLS model relating variations in the Spanish regional Gini indexes to changes in trade openness, disentangling the impact of import and export flows. Our results show that the direction of trade flows matters, as we observe that the effect of imports on the income distribution is ambiguous, whereas exports are beneficial in reducing inequalities. Moreover, the impact of both types of trade depends on the type of products traded and their origin or destination.

Keywords: trade; import exposure; income distribution; inequality (search for similar items in EconPapers)
JEL-codes: F14 O15 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2024
New Economics Papers: this item is included in nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:jau:wpaper:2024/09

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