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Trade Policy and the Household Distribution of Income

Joseph Francois and Hugo Rojas-Romagosa ()

No 04-051/2, Tinbergen Institute Discussion Papers from Tinbergen Institute

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: trade; inequality; distribution of income; Atkinson index; Gini coefficient; globalization; tariffs (search for similar items in EconPapers)
JEL-codes: F13 D31 O15 (search for similar items in EconPapers)
Date: 2004-05-04, Revised 2004-06-15
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Working Paper: Trade Policy and the Household Distribution of Income (2004) Downloads
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