Non-Gravity Trade

Brueckner, Markus; Long, Ngo Van; Vespignani, Joaquin L.

doi:10.24149/gwp388

Working Paper

Non-Gravity Trade

Abstract: 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 is 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: F1; E2;

https://doi.org/10.24149/gwp388