The Impacts of Trade Openness on Employment, Poverty and Inequality: The Case of Brazil
Catholic University Working Paper Series No. 09/02
28 Pages Posted: 20 Jan 2003
Date Written: September 2002
This paper investigates the impacts of greater trade openness on employment, poverty and inequality in Brazil. The empirical strategy is based on decomposition analysis exercises to assess the main determinants of current account deficits following trade liberalization as well as output decomposition into private sector demand, public sector expenditures and import substitution. Further to this aggregate analysis, we use a computable general equilibrium model to simulate different policy scenarios and use the results of this modeling approach to create counterfactual microsimulations and assess the impacts of greater trade openness on household income distribution and poverty ratios. Our conclusion is that trade liberalization alone will not be sufficient to significantly reduce poverty and inequality in Brazil.
Keywords: Trade liberalization, poverty, inequality
JEL Classification: F14, J24, J31
Suggested Citation: Suggested Citation