Factor Immobility and Regional Impacts of Trade Liberalization Evidence on Poverty from India

Author/Editor: Topalova, Petia
Publication Date: September 01, 2010
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Summary: This paper uses the 1991 Indian trade liberalization to measure the impact of trade liberalization on poverty, and to examine the mechanisms underpinning this impact. Variation in sectoral composition across districts and liberalization intensity across production sectors allows a difference-in-difference approach. Rural districts, in which production sectors more exposed to liberalization were concentrated, experienced slower decline in poverty and lower consumption growth. The impact of liberalization was most pronounced among the least geographically mobile, at the bottom of the income distribution, and in Indian states where inflexible labor laws impeded factor reallocation across sectors.
Series: Working Paper No. 10/218
Subject(s): Fiscal reforms | Income distribution | India | International trade | Nontariff barriers | Poverty | Private consumption | Protectionism | Tariffs | Trade liberalization | Trade policy

Author's Keyword(s): Poverty | Trade Liberalization | India | Tariff
Publication Date: September 01, 2010
Format: Paper
Stock No: WPIEA2010218 Pages: 46
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