Working Paper No. 13 - The impact of trade liberalization upon inequality in developing countries

This working paper is the output from the first phase of a research project dedicated to how developing countries react when opening to trade and foreign direct investment on employment, income distribution, and poverty. It’s based on international cross-section data and uses different regions and countries to analyse trade liberalization and its effects on income distribution using the Skill-Enhancing-Trade (“SET”) hypothesis. The research has shown that with trade liberalization, relative wages have increased with economic growth, which has led to various conclusions pertaining to wage dispersion.