Equity, Welfare, and the Setting of Trade Policy in General EquilibriumThe authors analyze general equilibrium relationships between trade policy and the household distribution of income, decomposing social welfare into real income level and variance components and emphasizing Gini and Atkinson indexes. They embed these inequality-adjusted social welfare functions in a general equilibrium structure mapping from tariff protection to household inequality. This yields predictions regarding the linkages between trade protection, country characteristics, and inequality within a broad general equilibrium framework. In addition, the authors can separate the efficiency and equity effects of tariffs on welfare. They then examine endogenous tariff formation when policymakers care about both equity and special interests. |
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2x2 countries 2x2 model Atkinson index average income capital-abundant countries core general equilibrium Corollary defined distribution of income distributional effect effect of import efficiency effects endowment equations 28 equations 30 equilibrium system equity concerns factor incomes Flewitt follows functional distribution Gini coefficient Gini index Heckscher-Ohlin economy Heckscher-Ohlin model Helpman higher tariffs household distribution household income impact of trade import protection income distribution income share inequality aversion inequality effects inequality indexes literature lobby Lorenz curve lower tariffs mean income neoclassical optimum tariff ownership matrix per-capita income protection on inequality real income effects reduced form relative Research Working Paper revenue function Ricardo-Viner rise fall Sen-type social welfare September 2005 skilled labor small country social welfare function specific factors Spilimbergo Stolper-Samuelson theorem system fundamentals tariff changes tariff revenue terms-of-trade trade model trade policy unskilled labor variance component veil of ignorance welfare effect World Bank Yaptenco yields Οτ Эт