Trade Liberalization, Poverty and Inequality: Evidence from Indian Districts

摘要: Although it is commonly believed that trade liberalization results in higher GDP, little known about its effects on poverty and inequality. This paper uses the sharp India 1991, spurred to a large extent by external factors, measure causal impact of inequality districts India. Variation pre-liberalization industrial composition across variation degree industries allow for difference-in-difference approach, establishing whether certain areas benefited more from, or bore disproportionate share burden liberalization. In rural where exposed were concentrated, incidence depth decreased less as result liberalization, setback 15 percent India's progress reduction over 1990s. The are robust pre-reform trends, convergence time-varying initial district-specific characteristics. Inequality was unaffected sample all Indian states both urban areas. findings related extremely limited mobility factors regions findings, consistent with specific model trade, suggest minimize social costs inequality, additional policies may be needed redistribute some gains from winners those who do not benefit much.