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Structural transformation and inequality: Does trade openness matter?

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  • Wannaphong Durongkaveroj

Abstract

The purpose of this paper is to examine how trade openness impacts on income inequality in the process of economic transformation. The paper begins with an analytical framework drawing on Kuznets (1955) to set the stage for the empirical analysis. It then examines the role of trade openness in the structural transformation-income inequality nexus using a multicountry panel data analysis covering 48 countries for the period from 1960 to 2010. The results suggest that an increase in the share of employment in manufacturing reduces inequality, irrespective of the stages of structural transformation, and the impact on income inequality is larger for countries with higher degree of trade openness. The findings withstand controlling for the other relevant explanatory variables and the use of different estimators.

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  • Wannaphong Durongkaveroj, 2021. "Structural transformation and inequality: Does trade openness matter?," Departmental Working Papers 2021-10, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2021-10
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    More about this item

    Keywords

    structural change; inequality; trade openness; inequality;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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