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Trade and Inequality: Impact on Spanish Regional Income Distributions

Author

Listed:
  • Ignacio Pineda-Devesa

    (Department of Finance and Accounting, Universitat Jaume I, Castellón, Spain)

  • Joan Martín-Montaner

    (IEI and Economics Department, Universitat Jaume I, Castellón, Spain)

Abstract

This paper studies the relationship between trade openness and income inequality at a regional level. Trade models predict that the expected benefits of trade are not necessarily distributed equally across the population within a country. Most research on the impact of trade on income distribution has focused solely on the impact of import flows at the national level. Using data from income surveys and trade at the shipment level, we estimate a 2SLS model relating variations in the Spanish regional Gini indexes to changes in trade openness, disentangling the impact of import and export flows. Our results show that the direction of trade flows matters, as we observe that the effect of imports on the income distribution is ambiguous, whereas exports are beneficial in reducing inequalities. Moreover, the impact of both types of trade depends on the type of products traded and their origin or destination.

Suggested Citation

  • Ignacio Pineda-Devesa & Joan Martín-Montaner, 2024. "Trade and Inequality: Impact on Spanish Regional Income Distributions," Working Papers 2024/09, Economics Department, Universitat Jaume I, Castellón (Spain).
    • Handle: RePEc:jau:wpaper:2024/09
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    More about this item

    Keywords

    trade; import exposure; income distribution; inequality;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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