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Trade liberalization, inequality and poverty in Brazilian states

Marta Castilho 1, Marta Menéndez 2, 3, 4, Aude Sztulman 2

(2009-09)

This paper studies the impact of trade liberalization and international trade on household income inequality and poverty using detailed micro-data across Brazilian states, from 1987 to 2005. Results suggest that Brazilian states that were more exposed to tariff cuts experienced smaller reductions in household poverty and inequality. If significance of results on Brazilian states depends on the choice of poverty and inequality indicators, robust and contrasting results emerge when we disaggregate into rural and urban areas within states. Trade liberalization contributes to poverty and inequality increases in urban areas and may be linked to inequality declines in rural areas (no significant effect is found for rural poverty). In terms of observed integration to world markets, import penetration plays a similar role as trade liberalization for Brazilian states as a whole. On the contrary, rising export exposure appears to have significantly reduced both measures of household welfare.

1:	Universidade Federal Fluminense
	Universidade Federal Fluminense
2:	Laboratoire d'Economie de Dauphine - Equipe Economie de la mondialisation et du développement (LEDa - DIAL)
	Université Paris IX - Paris Dauphine
3:	Laboratoire d'Economie Appliquée (LEA)
	Institut national de la recherche agronomique (INRA) : UR1043
4:	Ecole d'Économie de Paris - Paris School of Economics (EEP-PSE)
	Ecole d'Économie de Paris

Subject

:

Humanities and Social Sciences/Economy and finances

Keyword(s): trade liberalization – poverty and inequality – Brazilian states

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From: Caroline Bauer <>

Submitted on: Wednesday, 9 March 2011 12:06:12

Updated on: Wednesday, 9 March 2011 15:56:10