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- Trade openness tends to lower prices, which benefits low-income households more than high-income households, because they generally consume a relatively larger share of their income on traded goods. In addition, trade can support jobs by connecting low-income individuals to larger markets.
www.weforum.org/stories/2024/10/five-facts-on-how-international-trade-shapes-inclusivity/
People also ask
Do low-income households benefit more from trade?
Does increased trade affect low- and high-income households differently?
How does trade affect income and inequality?
Why are poorer households more sensitive to the price effects of trade?
Does trade affect different types of households?
How does trade affect income distribution?
Questions about who benefits from free trade – and at what cost – have resurfaced as part of the backlash against globalisation. This column uses data from 54 low- and middle-income countries to show that in a majority of cases, trade liberalisation increases both incomes and inequality.
- Effects of Trade on Labor Markets
- Effect of Trade on Prices
- Putting Things Together
- Conclusion
How trade affects labor markets depends on how much those markets are exposed to import competition or export opportunities. For firms with exporting opportunities, (such as those producing aircrafts, optical and medical instruments, and soybeans) increased trade can lead to revenue and job growth, while firms that face competition from less expens...
When economists advocate for more open trade, they usually point to lower consumer prices as a major benefit. These price decreases may be less salient to the public than, for example, a plant closure, but the magnitude of the effect can be very large because the benefit is enjoyed by many households. Increased trade leads to lower prices through a...
So far we have presented evidence of two channels that may affect low- and high-income households differently and that work in opposite directions. Labor market effects tend to differentially harm low-income households, but the price effect disproportionately benefits them. On net, how important is each channel? To shed some light on the answer to ...
Economists overwhelmingly view the benefits of trade as outweighing the costs. In this Commentary, we have discussed how trade can affect households differently depending on their position in the labor market and the pattern of their consumption expenditures. The effects from these two channels go in opposite directions: low-skill or low-wage house...
Jul 18, 2019 · The wider evidence for developed countries suggests that low-income consumers benefit more from trade-induced lower prices than do high-income consumers because a higher share of their income is spent on traded goods.
Nov 7, 2017 · Our cross-country estimates for trade's impact on real income are consistently positive and significant over time. At the same time, we do not find any statistical evidence that more trade increases aggregate measures of income inequality.
- Diego A. Cerdeiro, Andras Komaromi
- 2017
The conceptual link between trade and household welfare. When a country opens up to trade, the demand and supply of goods and services in the economy shift. As a consequence, local markets respond, and prices change. This has an impact on households, both as consumers and as wage earners. The implication is that trade has an impact on everyone.
- Esteban Ortiz-Ospina, Diana Beltekian, Max Roser
- 2018
Figure 3 shows our baseline results for the effect of trade on income and inequality. According to the point estimates, a one percentage point increase in trade openness raises real income per capita by between 2 and 5 percent (Figure 3a). These estimates are overwhelmingly significant for all time periods.
We find that the difference in the price effect for low-income and low-wealth households and that for high-income, high-wealth households is of roughly the same magnitude as the difference in the labor market effect for similar households from other studies (Caliendo, Dvorkin, and Parro, 2019; Lyon and Waugh, 2019).
