A Detailed Analysis of International Trade and Income Inequality in Developed Countries

This thesis analyzes the impact of trade on income inequality in 34 OECD countries between 2000 and 2010. The combined trade with other developed countries and least developed countries (LDCs) is found to have no effect. The analysis furthermore fails to corroborate the view that the separate trade with developed countries and LDCs impact inequality. However, imports from LDCs exhibit a small positive effect while exports to LDCs are found to reduce inequality. The limited impact of trade implies that other factors may explain the recent rise in inequality in developed countries. Indeed, the analysis suggests that greater technological progress and inflation may increase income disparities. Conversely, a larger share of employment in industry is found to reduce inequality