Premium
Openness and Poverty in the Postwar United States
Author(s) -
Jin Jang C.
Publication year - 1998
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.00127
Subject(s) - openness to experience , economics , poverty , odds , free trade , causality (physics) , productivity , international economics , liberalization , development economics , macroeconomics , economic growth , logistic regression , market economy , medicine , psychology , social psychology , physics , quantum mechanics
Recent trade theory suggests that freer trade can be the primary cause of the observed rise of poverty in the United States. The short‐run dynamic relationships between openness and poverty are examined using the concept of Granger causality. That the ultimate source of rising poverty since 1973 is trade liberalization of the US economy cannot be rejected. The result is convincing when two subsamples (pre‐ and post‐1973) are reestimated. These findings are at odds with the conventional model in which freer trade raises productivity and hence reduces the poverty rate, but appear consistent with some models in which openness raises poverty.