Trade and the political economy of redistribution

Gonzague Vannoorenberghe, E. Janeba

Research output: Contribution to journalArticleScientificpeer-review

2 Citations (Scopus)

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

Keywords

  • international trade
  • redistribution
  • political economy
  • factor mobility

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