APL (Ajiken Power Lunch)

Thursday, the 2^nd of July, 11:00 a.m. to 12:15 p.m.

IDE-JETRO C23 Meeting Room

This paper quantifies the first-order welfare effects of free trade agreements (FTAs) on households in a low-income country. Households earn income from wage labor and farm and non-farm production, and they consume home-produced, domestically produced, and imported goods. FTA-induced tariff reductions between 2004 and 2019 are mapped into household-level welfare changes for Cambodia. Under the assumptions of complete tariff pass-through and uniform wage-tariff elasticities, tariff cuts generate negative income effects across the distribution, with middle-income households experiencing the largest losses and both low- and high-income households facing smaller declines. In contrast, the cost-of-living effects of tariff reduction are positive and rise with income. This pro-rich pattern is driven by gains from imported goods, which increase sharply with income, whereas gains from domestic goods are relatively uniform across households.

Kiyoyasu Tanaka

Toshitaka Gokan