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Trade liberalization, poverty and efficient equity

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  • Harrison, Glenn W.
  • Rutherford, Thomas F.
  • Tarr, David G.

Abstract

Even if trade liberalization results in aggregate welfare gains over all households, it is possible that the poorest households could lose. We illustrate two approaches to designing trade liberalization in Turkey which ensure that the poor will not lose. The first approach uses direct compensation to losers. The second approach uses limited policy reform, where exceptions to the across-the-board reform are chosen to meet the equity goal. In each case, we map out some of the efficiency costs of attaining these equity goals so as to inform policy makers about the least costly way of attaining them.
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Suggested Citation

  • Harrison, Glenn W. & Rutherford, Thomas F. & Tarr, David G., 2003. "Trade liberalization, poverty and efficient equity," Journal of Development Economics, Elsevier, vol. 71(1), pages 97-128, June.
    • Handle: RePEc:eee:deveco:v:71:y:2003:i:1:p:97-128
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    1. Thomas F. Rutherford & E. Elisabet Rutstrom & David Tarr, 2014. "Morocco's free trade agreement with the EU: A quantitative assessment," World Scientific Book Chapters, in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 17, pages 405-437, World Scientific Publishing Co. Pte. Ltd..
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    16. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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