Trade, Education, and Income Inequality
78 Pages Posted: 23 Jun 2020
Date Written: 2020
This paper examines the relationship between countries' bilateral trade with the United States that is not due to gravity (non-gravity trade) and the distribution of income within countries. In countries where only a small share of the population are educated, an increase in non-gravity trade is associated with a significant increase in income inequality. As education of the population increases the correlation between non-gravity trade and income inequality becomes smaller. Non-gravity trade has no significant effect on income inequality in countries that are world leaders in education.
Keywords: non-gravity trade, inequality, education
JEL Classification: F100, E200
Suggested Citation: Suggested Citation