Reports
Discussion Papers
No.650 The Impact of Exports on Income Inequality in Developing Countries
March 2017
ABSTRACT
Trade
exhibits
two
contrasting
effects
on
income
inequality
in
developing
countries
(DCs).
On
the
one
hand,
trade
openness
benefits
unskilled
labor
in
preference
to
skilled
labor
and
capital
(the
Stolper–Samuelson
effect).
On
the
other
hand,
trade
openness
increases
the
demand
for
skilled
(rather
than
unskilled)
labor
inputs
(the
skill
premium
effect).
Recent
studies
that
provide
stronger
support
for
the
skill
premium
model
have
focused
on
wage
inequality
or
have
chosen
higher-income
DCs.
We
test
the
effect
of
export
growth
on
income
inequality
for
70
lower
income
DCs
and
36
higher-income
DCs,
using
an
unbalanced
panel
dataset
for
the
1971–2012
period.
The
results
show
that
the
export/GDP
ratio
has
a
negative
effect
on
income
inequality
for
lower-income
DCs,
but
no
significant
effect
was
found
for
higher-income
DCs.
Keywords: exports,
income
inequality,
skill
premium,
Stolper–Samuelson
theorem
JEL
classification: F16,
J46,
O15
PDF available at http://hdl.handle.net/2344/00048857
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