Trade and the political economy of redistribution

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This paper shows how international trade affects the support for policies which redistribute income between workers across sectors, and how the existence of such policies changes the support for trade liberalization. Workers, who are imperfectly mobile across sectors, vote on whether to subsidize ailing sectors, thereby redistributing income but also distorting the labor allocation. We present three main findings. First, redistributive policies are more “likely” to arise in a small open than in a closed economy for a broad range of parameters. Second, if a redistributive policy is adopted in both situations, income differences across sectors tend to be lower in the open economy. Third, the possibility to redistribute income across sectors raises the political support for trade liberalization in the first place.
Original languageEnglish
Pages (from-to)233-244
JournalJournal of International Economics
Volume98
Issue number1
DOIs
Publication statusPublished - 2016

Fingerprint

Income
Redistribution
Political economy
Trade liberalization
Workers
Redistributive policy
Policy change
International trade
Income differences
Labor
Vote
Political support
Open economy

Keywords

  • international trade
  • redistribution
  • political economy
  • factor mobility

Cite this

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Trade and the political economy of redistribution. / Vannoorenberghe, Gonzague; Janeba, E.

In: Journal of International Economics, Vol. 98, No. 1, 2016, p. 233-244.

Research output: Contribution to journalArticleScientificpeer-review

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