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Trade Liberalisation, Poverty and Inequality in South Africa: A Computable General Equilibrium‐Microsimulation Analysis *
Author(s) -
HERAULT NICOLAS
Publication year - 2007
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.2007.00417.x
Subject(s) - computable general equilibrium , economics , microsimulation , poverty , earnings , international economics , inequality , free trade , liberalization , general equilibrium theory , macroeconomics , labour economics , econometrics , international trade , economic growth , market economy , transport engineering , engineering , mathematical analysis , mathematics , accounting
This paper studies the effects of trade liberalisation on poverty and income inequality in South Africa. The main issue of interest is the effect of international trade on households (especially their income). The approach presented in this paper relies on combining a macro‐orientated computable general equilibrium model with a microsimulation model. The main concern regarding poor households is whether the decrease in nominal earnings for formal low‐skilled and skilled workers is offset by the upward trend in formal employment levels. The analysis indicates that such a trade‐off occurs, implying a decrease in poverty due to trade liberalisation.