Trade Openness and Income Inequality: Fresh Evidence Based on Different Inequality Measures

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Published: Jul 31, 2021
Keywords:
income inequality trade openness Gini coefficient two-step GMM

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Noor Ahmed Khoso
Department of Business Administration, Sukkur IBA University, Pakistan
Sheraz Rajput
Department of Business Administration, Sukkur IBA University, Pakistan
Tariq Aziz
Department of Business Administration, Sukkur IBA University, Pakistan
Akseer Hussain
Department of Business Administration, Sukkur IBA University, Pakistan
Agha Jahanzeb
Department of Business Administration, Sukkur IBA University, Pakistan

Abstract

Theoretical and empirical literature on the impact of trade openness on income inequality is inconclusive. The inconsistent findings may be partly the result of biased measures of income inequality and divergent data sources. This paper improves upon the previous literature by examining the impact of trade openness on income inequality, using data from three major data sources: the Standardized World Income Inequality Database (SWIID), including disposable and market income; World Development Indicators (WDI); and the University of Texas Inequality Project (UTIP); as well as four Gini coefficients as measures of inequality. We apply a two-step system GMM estimation technique and the findings suggest a negative relationship between trade openness and income inequality. Based on the empirical results, we conclude that changing the measure of inequality from different data sources does not affect the empirical results related to the trade-inequality relationship.

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How to Cite
Khoso, N. A., Rajput, S., Aziz, T. ., Hussain, A. ., & Jahanzeb, A. . (2021). Trade Openness and Income Inequality: Fresh Evidence Based on Different Inequality Measures. Asian Journal of Applied Economics, 28(2), 63–81. Retrieved from https://so01.tci-thaijo.org/index.php/AEJ/article/view/245051
Issue
Vol. 28 No. 2 (2021): July-December 2021
Section
Research Articles

The paper is published under CC BY-NC-ND, in which the article is freely downloaded and shared in its original form non-commercially and its citation details are identified.

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