Market imperfections, wealth inequality, and the distribution of trade gains

Arbeitspapier

Globalization increasingly involves less-developed countries (LDCs), i.e., economies which usually suffer from severe imperfections in their financial systems. Taking these imperfections seriously, we analyze how credit frictions affect the distributive impact of trade liberalizations. We find that free trade significantly widens income differences among firm owners in LDCs: While wealthy entrepreneurs are better off, relatively poor business people lose. Intuitively, with integrated markets, profit margins shrink - which makes access to credit particularly difficult for the least affluent agents. Richer entrepreneurs, by contrast, win because they can take advantage of new export opportunities. Our findings resonate well with a number of empirical regularities, in particular with the observation that some liberalizing LDCs have observed a surge in top-income shares.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Discussion Papers ; No. 10-06

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Macroeconomic Analyses of Economic Development ; Trade Policy; International Trade Organizations ; Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
• Thema: wealth inequality ; trade liberalization ; credit market frictions ; top incomes ; Finanzmarkt ; Unvollkommener Markt ; Kapital ; Einkommensverteilung ; Internationale Wirtschaft ; Optimale Verteilung ; Wirtschaftswachstum ; Theorie

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Foellmi, Reto ; Oechslin, Manuel
• Ereignis: Veröffentlichung
• (wer): University of Bern, Department of Economics
• (wo): Bern
• (wann): 2010

Weitere Informationen

• Handle: http://hdl.handle.net/10419/76754
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ