The Effects of the Colombian Trade Liberalization on Urban Poverty

47 Pages Posted: 12 Oct 2012

See all articles by Pinelopi Goldberg

Pinelopi Goldberg

Yale University - Department of Economics; National Bureau of Economic Research (NBER); Yale University - Cowles Foundation

Nina Pavcnik

Dartmouth College - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Date Written: January 2005

Abstract

We examine whether the Colombian trade reform can explain any of Colombia's decline in urban poverty between 1984 and 1995. Our approach focuses on short- and medium- run channels through which trade reform could affect poverty. Despite the chronological coincidence of the poverty reduction with the trade reforms over this period, we do not observe any evidence of a link between poverty and tariff reductions operating through the labor income channel. Our descriptive analysis suggests that although poverty is predominately concentrated among individuals living in households with unemployed head, it is non-negligible among the employed and especially those working in the informal sector and those paid below minimum wage. Industry affiliation also plays a role. However, we find no evidence that the trade reforms reduced poverty via any of the above variables in a significant way. We cannot rule out the possibility that trade liberalization has contributed to the poverty reduction through general equilibrium effects, and in particular through its potential role in lowering the prices of goods consumed primarily by the poor.

Suggested Citation

Goldberg, Pinelopi (Penny) and Pavcnik, Nina, The Effects of the Colombian Trade Liberalization on Urban Poverty (January 2005). NBER Working Paper No. w11081. Available at SSRN: https://ssrn.com/abstract=2160672

Pinelopi (Penny) Goldberg (Contact Author)

Yale University - Department of Economics ( email )

P.O. Box 208268
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New Haven, CT 06520-8268
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203-432-6323 (Fax)

National Bureau of Economic Research (NBER)

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Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Nina Pavcnik

Dartmouth College - Department of Economics ( email )

6106 Rockefeller Hall
Hanover, NH 03755
United States
603-646-2537 (Phone)
603-646-2122 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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