The Impact of Trade on Inequality in Developing Countries

51 Pages Posted: 26 Sep 2017

See all articles by Nina Pavcnik

Nina Pavcnik

Dartmouth College - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

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Date Written: September 2017


This paper assesses the current state of evidence on how international trade shapes inequality and poverty through its influence on earnings and employment opportunities. While the focus is mainly on developing countries, in part because we have more evidence in that context, the discussion draws parallels to the empirical evidence from developed countries. The paper also discusses perceptions about international trade in over 40 countries at different levels of development, including perceptions on trade's overall benefits for the economy, trade's effect on the livelihood of workers through wages and jobs, and trade's contribution to inequality. The paper concludes with a survey of evidence on several policies that could mitigate the adverse effects of import competition.

Keywords: inequality, Informality, Local Labor Markets, poverty, trade policy

JEL Classification: F10, F13, F14, F16, J2, J46, O17, O24

Suggested Citation

Pavcnik, Nina, The Impact of Trade on Inequality in Developing Countries (September 2017). CEPR Discussion Paper No. DP12331, Available at SSRN:

Nina Pavcnik (Contact Author)

Dartmouth College - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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National Bureau of Economic Research (NBER)

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