Household Inequality, Social Welfare, and Trade

30 Pages Posted: 14 Nov 2010

See all articles by Joseph F. Francois

Joseph F. Francois

University of Bern - Department of Economics; Centre for Economic Policy Research (CEPR); Vienna Institute of International Economic Studies (WIIW); University of Adelaide - School of Economics

Hugo Rojas-Romagosa

CPB Netherlands Bureau for Economic Policy Analysis

Date Written: September 2010

Abstract

Working with Sen social welfare functions (meaning explicit separability between mean income and income dispersion), we develop a generalized dual approach to tracking household inequality aspects of social welfare in general equilibrium. We highlight how household equity can be examined analytically alongside production efficiency in duality-based models, using our dual framework to explore potential trade-offs between efficiency and equity effects of trade policy. Our results complement the set of standard inequality results in trade theory focused on functional rather than household inequality. We also find that the relative distributional impact of tariffs on welfare is conditional on the initial level of inequality.

Keywords: equity and welfare in general equilibrium, equity in CGE, Sen welfare functions, trade and equity

JEL Classification: D31, D72, F13, O15

Suggested Citation

Francois, Joseph F and Rojas-Romagosa, Hugo, Household Inequality, Social Welfare, and Trade (September 2010). CEPR Discussion Paper No. DP7998. Available at SSRN: https://ssrn.com/abstract=1707888

Joseph F Francois (Contact Author)

University of Bern - Department of Economics ( email )

Schanzeneckstrasse 1
Bern, CH-3001
Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Vienna Institute of International Economic Studies (WIIW) ( email )

Oppolzergasse 6
A-1010 Vienna
Austria

University of Adelaide - School of Economics ( email )

Adelaide SA, 5005
Australia
+61 8 8303 5540 (Phone)
+61 8 8223 1460 (Fax)

Hugo Rojas-Romagosa

CPB Netherlands Bureau for Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands
+31 70-338 3338 (Phone)
+31 70-338 3350 (Fax)

HOME PAGE: http://www.cpb.nl

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