The effect of the trade opennes on the income distribution of Latin America
Keywords
Loading...
Authors
Issue Date
2018-07-13
Language
en
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
This study investigates the impact of the structural reforms in trade policy on the income distribution of Latin America in the period 1990-2015. This is accomplished by analyzing the effects of trade openness on the wage gap between high-skilled and low-skilled workers. It is found that the radical change in trade openness, in general, did not affect the wage gap. In only one of the six models, trade openness has a significant positive effect on the wage gap. The results show that a rise in trade volume increases income inequality. This effect can mainly be attributed to the changes in exports. Furthermore, an interaction effect exists between education and the structural reforms. It is found that trade liberalization decreases inequality in low-skilled labor abundant countries, whereas it increases inequality in high-skilled labor abundant countries. This effect is in line with the Heckscher-Ohlin model and the Stolper-Samuelson theorem. In contrast to previous research, this study finds no direct relationship between trade openness and income inequality.
Description
Citation
Supervisor
Faculty
Faculteit der Managementwetenschappen