Household Inequality, Welfare, and the Setting of Trade Policy
Joseph Francois and
Hugo Rojas-Romagosa ()
No 04-086/2, Tinbergen Institute Discussion Papers from Tinbergen Institute
We analyze general equilibrium relationships between trade policy and the household distribution of income, decomposing social welfare into real income level and variance components through Gini and Atkinson indexes. We embed these inequality-adjusted social welfare functions in a general equilibrium structure mapping from tariff protection to household inequality. This yields predictions regarding the linkages between trade protection, country characteristics and inequality in Heckscher-Ohlin and Ricardo-Viner frameworks. In addition, we can separate the efficiency and equity effects of tariffs on welfare. We then examine endogenous tariff formation when policy makers care about both equity and special interests.
Keywords: trade policy; household distribution of income; Atkinson index; Gini index; endogenous tariffs; tariffs and equity (search for similar items in EconPapers)
JEL-codes: F13 O15 D31 D72 (search for similar items in EconPapers)
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Working Paper: Household Inequality, Welfare, and the Setting of Trade Policy (2005)
Working Paper: Household Inequality, Welfare and the Setting of Trade Policy (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20040086
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