Regional Income Inequality and International Trade

• Published in: Economic geography Vol. 80; no. 3; pp. 261 - 286
• Main Authors: Silva, Julie A., Leichenko, Robin M.
• Format: Journal Article
• Language: English
• Published: Oxford, UK Routledge 01.07.2004; Blackwell Publishing Ltd; Clark University; Taylor & Francis Ltd
• Subjects: America; Bgi / Prodig; Census regions; Censuses; Countries; Economic conditions; Economic development; economic globalization; Foreign exchange rates; Geography; Globalization; Human geography; Imports; Income; Income inequality; Income shares; Inequality; International trade; Liberalization; Manufacturing; Organizational change; Prices; Regional development; regional income inequality; Regions; Skilled workers; Trade regionalization; U.S.A; United States of America; Wages & salaries; United States of America; Regional development; Wage inequality; Economy; Globalization
• DOI: 10.1111/j.1944-8287.2004.tb00235.x
• ISSN: 0013-0095

This study investigates the effects of trade on income inequality across regions in the United States. Using both structural and price-based measures of regional trade involvement, we evaluate the effects of trade on inequality within and across states, the metropolitan and nonmetropolitan portions of the states, and the major census regions. Across all states and metropolitan and nonmetropolitan areas, we found that trade affects inequality primarily via import and export prices. In contrast to our expectations, however, a weaker dollar-more expensive imports and cheaper exports-is associated with the worsening of a state's position relative to other states and greater inequality within the state. Across the census regions, both our price and orientation measures had significant effects, but the direction of these effects varied by region. Whereas many regions benefited from cheaper imports, states in regions that are traditionally home to low-wage sectors, including the Southeast and South Central regions, were made relatively worse off by lower import prices and by greater orientation toward import-competing goods. Our findings reinforce notions about the uneven impacts of globalization and suggest that policy measures are needed to ensure that both the benefits and costs of involvement in international trade are shared across regions.