DP12331 The Impact of Trade on Inequality in Developing Countries

Author(s): Nina Pavcnik
Publication Date: September 2017
Keyword(s): inequality, Informality, Local Labor Markets, poverty, trade policy
JEL(s): F10, F13, F14, F16, J2, J46, O17, O24
Programme Areas: International Trade and Regional Economics, Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=12331

This paper assesses the current state of evidence on how international trade shapes inequality and poverty through its influence on earnings and employment opportunities. While the focus is mainly on developing countries, in part because we have more evidence in that context, the discussion draws parallels to the empirical evidence from developed countries. The paper also discusses perceptions about international trade in over 40 countries at different levels of development, including perceptions on trade's overall benefits for the economy, trade's effect on the livelihood of workers through wages and jobs, and trade's contribution to inequality. The paper concludes with a survey of evidence on several policies that could mitigate the adverse effects of import competition.