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Trade openness and income inequality in China and the SAARC Region
Author(s) -
Zakaria Muhammad,
Fida Bashir Ahmed
Publication year - 2016
Publication title -
asian‐pacific economic literature
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.232
H-Index - 21
eISSN - 1467-8411
pISSN - 0818-9935
DOI - 10.1111/apel.12152
Subject(s) - openness to experience , economics , economic inequality , income distribution , per capita income , inequality , income inequality metrics , liberalization , panel data , comprehensive income , free trade , china , international economics , development economics , distribution (mathematics) , demographic economics , public economics , gross income , geography , econometrics , market economy , psychology , mathematical analysis , social psychology , demography , mathematics , archaeology , tax reform , sociology , state income tax
The paper empirically examines the effects of trade liberalisation on income inequality in China and the South Asian Association for Regional Cooperation countries. Panel data analysis is conducted for the period of 1973 to 2012. The results show that liberal trade policies have increased income inequality in these countries. These results are robust to alternative liberalisation measures. The control variables used have differing effects on income distribution. Per capita income has an increasing effect on income inequality, while education, financial development, financial openness, democracy, and government size are shown to reduce income inequality. These outcomes can be expected to have important policy implications for the use of trade liberalisation in these countries.