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TitleThe Distributional Impacts of Trade: Empirical Innovations, Analytical Tools, and Policy Responses
AuthorJakob Engel, Deeksha Kokas, Gladys Lopez-Acevedo and Maryla Maliszewska
SubjectTrade, Consumers, Markets
Date of Publication2021
PublisherWorld Bank
Number of Pages131
KeywordsConsumers, Markets
AbstractThis report advances the policy maker’s ability to analyze trade policy retrospectively, and it provides new methods for short- and long-term analysis of the impact of prospective trade shocks on communities and countries. The Household Impacts of Tariff (HIT) approach incorporates detailed consumption patterns at the household level and estimates short-term impacts of tariff line changes on consumption in low income countries. The extension of the Global Income Distribution Dynamics (GIDD) approach provides greater granularity in the analysis of future trade policy changes, so that policy makers can assess the impact of reductions of tariffs, changes to nontariff measures, and improvements in trade facilitation at the subnational level. Reduced form and structural approaches using detailed country-specific micro data allow for the study of impacts on local labor markets across time, regions, and demographic characteristics. Through a combination of methodologies, policy makers can assess the impact of trade on a much larger set of outcomes affecting welfare, including income and wages, levels of formal and informal sector employment, consumption, poverty, and inequality at both national and subnational levels. Analysis conducted using these different approaches could help policy makers understand how to craft a reform agenda that distributes the gains from trade more widely. The report further deepens our knowledge about localized effects of trade through five empirical country studies. Key findings from these case studies highlight very different political and economic dynamics that drive the differences in the impact of trade reforms on each country’s economic outcomes and are invaluable from a policy perspective. Insights from these could inform policies to help mitigate losses and distribute gains from trade reforms more broadly. These studies also identify the population groups that may require additional support. Overall, they demonstrate that trade exerts substantial income and poverty effects that concentrate themselves in specific sectors and regions, differ over the long and short term, and can be both positive and negative.
ISBN/ISSNISBN (electronic): 978-1-4648-1705-2
Filesize6326772 MB
File FormatPDF
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