Trade Openness and Income Inequality: A Panel Analysis of Latin American Countries (1990-2016)
Keywords:
Latin America, trade openness, international trade, income inequalityAbstract
This paper examines the determinants of income distribution in eighteen Latin American countries during the period 1990-2016. Our main goal is to assess if trade openness is associated with a better profile of income distribution. The results of our panel data analysis demonstrate that this is indeed the case. The effect of trade openness are robust to alternative econometric models, the inclusion of several control variables such as inflation, real GDP per capita, economic growth, the workforce skill level and the real effective exchange rate, as well as two alternative indicators of trade openness, the openness index, whose utilization is widespread in the literature, and the average tariff level.
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