Policy Reform and Income Distribution

Giovanni Cornia

Working Papers from United Nations, Department of Economics and Social Affairs

Abstract: The paper analyses the relationship between within-country income inequality and policies of domestic liberalization and external globalization. The models used to provide the rationale for such reforms—such as the Hecksher-Ohlin model—usually predict a decline in inequality. However, the evidence shows that inequality often rose with the introduction of such reforms. The paper tries to explain this discrepancy by identifying the conditions under which the models’ conclusions do not hold. Indeed, such models are based on a simplified view of reality and restrictive assumptions, and their predictions do not necessarily hold in conditions of institutional weakness, structural rigidities, inefficient markets, asymmetric information and persistent protectionism.

Keywords: trends in income inequality; factor income distribution; policy reform; structural adjustment; globalization (search for similar items in EconPapers)
JEL-codes: D31 D33 E69 F02 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2005-10
New Economics Papers: this item is included in nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:une:wpaper:3

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