Title : Does Trade Openness Increase Income Inequality in the United States?


Authors : Rajarshi Mitra and Md. Sharif Hossain

Abstract : The effects of trade openness on income inequality in empirical studies remain ambiguous. We examine the effects of an increase in trade openness on U.S. income inequality over the period 1979-2014. The relation between per-capita real income and income inequality is also examined. Cointegration technique is applied because of non-stationarity in the data. Results indicate significantly negative short-run relation between trade openness and income inequality. The long-run relation, however, is significantly positive and consistent with the propositions of the Hecksher-Ohlin-Samuelson theorem and the Stolper-Samuelson theorem. The negative short-run coefficient and the positive long-run coefficient provide evidence in favour of a “U-curve” relationship between trade openness and income inequality. The long-run relation between per-capita real income and income inequality is found to be significantly negative.


Journal : The Empirical Economics Letters Volume : 17 Year : October, 2018 Issue : 10
Pages : 1185-1194 City : Edition : Editors :
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