IDEAS home Printed from https://ideas.repec.org/p/ake/iiepdt/201614.html
   My bibliography  Save this paper

Income Distribution, Factor Endowments, and Trade Revisited: The Role of Non-Tradable Goods

Author

Listed:
  • Sebastian Galiani

    (University of Maryland)

  • Daniel Heymann

    (Instituto Interdisciplinario de Economía Política de Buenos Aires - UBA - CONICET)

  • Nicolas Magud

    (International Monetary Fund)

Abstract

We revisit the theme of the distributive implications of international prices and trade policies, focusing on economies relatively abundant in natural resources. The existence of non-traded goods adds a domestic demand channel that operates on factor prices, in addition to the usual Stolper-Samuelson effects. Depending on the configuration of the economy, we find diverse patterns in the response of factor earnings to international and policy shifts. The analysis relates to a number of long-standing concerns in developing economies, especially those of Latin America, and to the recent literature that has brought the role of international trade in shaping domestic social cleavages and policy tradeoffs back to the fore.

Suggested Citation

  • Sebastian Galiani & Daniel Heymann & Nicolas Magud, 2016. "Income Distribution, Factor Endowments, and Trade Revisited: The Role of Non-Tradable Goods," Documentos de trabajo del Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET) 2016-14, Universidad de Buenos Aires, Facultad de Ciencias Económicas, Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET).
    • Handle: RePEc:ake:iiepdt:201614
    as

    Download full text from publisher

    File URL: http://iiep-baires.econ.uba.ar/uploads/publicaciones/356/archivos/1.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Deardorff, Alan V & Courant, Paul N, 1990. "On the Likelihood of Factor Price Equalization with Nontraded Goods," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(3), pages 589-596, August.
    2. Oladi, Reza & Beladi, Hamid, 2009. "Market interconnection and wages," Economics Letters, Elsevier, vol. 105(1), pages 117-119, October.
    3. Rodrik, Dani, 1999. "Where Did All the Growth Go? External Shocks, Social Conflict, and Growth Collapses," Journal of Economic Growth, Springer, vol. 4(4), pages 385-412, December.
    4. Adriel Hermida, 2015. "Skill premium y tipo de cambio real: El caso de las economías latinoamericanas," CEDLAS, Working Papers 0176, CEDLAS, Universidad Nacional de La Plata.
    5. Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "Distributional Effects of Globalization in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 45(1), pages 39-82, March.
    6. Williamson, Jeffrey G., 2011. "Trade and Poverty: When the Third World Fell Behind," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262015158, December.
    7. James H. Cassing, 1978. "Transport Costs in International Trade Theory: A Comparison with the Analysis of Nontraded Goods," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 92(4), pages 535-550.
    8. Hamid Beladi & Ravi Batra, 2004. "Traded and Nontraded Goods and Real Wages," Review of Development Economics, Wiley Blackwell, vol. 8(1), pages 1-14, February.
    9. Ethier, Wilfred J., 1984. "Higher dimensional issues in trade theory," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 3, pages 131-184, Elsevier.
    10. Cassing, James, 1977. "International Trade in the Presence of Pure Monopoly in the Non-Traded Goods Sector," Economic Journal, Royal Economic Society, vol. 87(347), pages 523-532, September.
    11. W. E. G. Salter, 1959. "Internal And External Balance: The Role Op Price And Expenditure Effects," The Economic Record, The Economic Society of Australia, vol. 35(71), pages 226-238, August.
    12. Wolfgang F. Stolper & Paul A. Samuelson, 1941. "Protection and Real Wages," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 9(1), pages 58-73.
    13. T. W.Swan, 1960. "Economic Control In A Dependent Economy," The Economic Record, The Economic Society of Australia, vol. 36(73), pages 51-66, March.
    14. Jeffrey G. Williamson, 2011. "Trade and Poverty: When the Third World Fell Behind," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262015153, December.
    15. Sebastian Galiani & Norman Schofield & Gustavo Torrens, 2014. "Factor Endowments, Democracy, and Trade Policy Divergence," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(1), pages 119-156, February.
    16. International Monetary Fund, 2010. "A Noteon Terms of Trade Shocks and the Wage Gap," IMF Working Papers 2010/279, International Monetary Fund.
    17. Ethier, Wilfred, 1972. "Nontraded Goods and the Heckscher-Ohlin Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(1), pages 132-147, February.
    18. repec:bla:econom:v:41:y:1974:i:162:p:121-38 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gasparini, Leonardo & Galiani, Sebastian & Cruces, Guillermo & Acosta, Pablo A., 2011. "Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework, 1990-2010," IZA Discussion Papers 6244, Institute of Labor Economics (IZA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mestieri, Martí & Basco, Sergi & Smagghue, Gabriel & Liegey, Maxime, 2020. "The Heterogeneous Effects of Trade across Occupations: A Test of the Stolper-Samuelson Theorem," CEPR Discussion Papers 15186, C.E.P.R. Discussion Papers.
    2. Timothy Halliday & Daniel Lederman & Raymond Robertson, 2018. "Tracking wage inequality trends with prices and different trade models: evidence from Mexico," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(1), pages 47-73, February.
    3. repec:eee:labchp:v:3:y:1999:i:pb:p:2215-2288 is not listed on IDEAS
    4. Choi, Yoonho & Jin, Hailong & Choi, E. Kwan, 2018. "Why are nontraded goods cheaper in poor countries?," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 210-219.
    5. Schiff, Maurice & Valdes, Alberto, 1998. "Agriculture and the macroeconomy," Policy Research Working Paper Series 1967, The World Bank.
    6. Olper, Alessandro & Curzi, Daniele & Swinnen, Johan, 2018. "Trade liberalization and child mortality: A Synthetic Control Method," World Development, Elsevier, vol. 110(C), pages 394-410.
    7. Ariel Burstein & Martin Eichenbaum & Sergio Rebelo, 2005. "Large Devaluations and the Real Exchange Rate," Journal of Political Economy, University of Chicago Press, vol. 113(4), pages 742-784, August.
    8. Luigi Pascali, 2017. "The Wind of Change: Maritime Technology, Trade, and Economic Development," American Economic Review, American Economic Association, vol. 107(9), pages 2821-2854, September.
    9. Anna Pavlova & Roberto Rigobon, 2007. "Asset Prices and Exchange Rates," The Review of Financial Studies, Society for Financial Studies, vol. 20(4), pages 1139-1180.
    10. Beladi, Hamid & Oladi, Reza, 2011. "An elementary proposition on technical progress and non-traded goods," Journal of Mathematical Economics, Elsevier, vol. 47(1), pages 68-71, January.
    11. Pilar Poncela & Eva Senra & Lya Paola Sierra, 2017. "Long-term links between raw materials prices, real exchange rate and relative de-industrialization in a commodity-dependent economy: empirical evidence of “Dutch disease” in Colombia," Empirical Economics, Springer, vol. 52(2), pages 777-798, March.
    12. repec:phd:pjdevt:jpd_1990_vol__xvii_no__2-d is not listed on IDEAS
    13. Harashima, Taiji, 2019. "Preventing Widening Inequality: Economic Rents and Sustainable Heterogeneity," MPRA Paper 95727, University Library of Munich, Germany.
    14. Christopher M. Meissner & John P. Tang, 2017. "Upstart Industrialization and Exports, Japan 1880-1910," NBER Working Papers 23481, National Bureau of Economic Research, Inc.
    15. Sabine Engelmann, 2014. "International trade, technological change and wage inequality in the UK economy," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(2), pages 223-246, May.
    16. Friedrich Sell & Uwe Greiner & Henrich Maaß, 1999. "The east german disease revisited," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 5(2), pages 153-166, May.
    17. Yu-Chin Chen & Kenneth S. Rogoff & Barbara Rossi, 2010. "Can Exchange Rates Forecast Commodity Prices?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(3), pages 1145-1194.
    18. Kis-Katos, Krisztina & Sparrow, Robert, 2015. "Poverty, labor markets and trade liberalization in Indonesia," Journal of Development Economics, Elsevier, vol. 117(C), pages 94-106.
    19. Lars Karlsson & Peter Hedberg, 2021. "War and trade in the peaceful century: the impact of interstate wars on bilateral trade flows during the first wave of globalization, 1830–1913," Economic History Review, Economic History Society, vol. 74(3), pages 809-830, August.
    20. Boris Petkov, 2018. "Natural Resource Abundance: Is it a Blessing or is it a Curse," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 43(3), pages 25-56, September.
    21. Philip Lowe, 1992. "The Impact of Real and Nominal Shocks on Australian Real Exchange Rates," RBA Research Discussion Papers rdp9201, Reserve Bank of Australia.
    22. Martina Cioni & Giovanni Federico & Michelangelo Vasta, 2020. "The two Revolutions in Economic History," Working Papers 0192, European Historical Economics Society (EHES).

    More about this item

    Keywords

    Income distribution; Factor endowments; International trade; Non-tradable goods;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ake:iiepdt:201614. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: IIEP UBA-CONICET (email available below). General contact details of provider: https://edirc.repec.org/data/ieeubar.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.