Publication: Recent Perspectives on Trade and Inequality
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2011-08-01
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2012-03-19
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The 1990's dealt a blow to traditional Heckscher-Ohlin analysis of the relationship between trade and income inequality, as it became clear that rising inequality in low-income countries and other features of the data were inconsistent with that model. As a result, economists moved away from trade as a plausible explanation for rising income inequality. In recent years, however, a number of new mechanisms have been explored through which trade can affect(and usually increase) income inequality. These include within-industry effects due to heterogeneous?firms; effects of offshoring of tasks; effects on incomplete contracting; and effects of labor-market frictions. A number these mechanisms have received substantial empirical support.
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“Harrison, Ann; McLaren, John; McMillan, Margaret. 2011. Recent Perspectives on Trade and Inequality. Policy Research Working Paper ; No. 5754. © World Bank. http://hdl.handle.net/10986/3515 License: CC BY 3.0 IGO.”
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