Does trade cause inequality

The relationship between international trade and income distribution of countries becomes a hot topic in economics research. This paper use random forest method and stepwise regression method to complete variables selection work from a big panel data set with many economic variables. Analysis of an unbalanced panel of country level data reveals that the trade will reduce income inequality in most situations. The coefficients for trade variables are significant in both two types of models, i.e., with and without considering about country effects. But when we split data set into two groups, the coefficients are significant for developed countries but not significant for developing countries.