cite: Liyanaarachchi2016
author: Liyanaarachchi, T. S., Naranpanawa, A., & Bandara, J. S. 
year: 2016
title: "Impact of trade liberalisation on labour market and poverty in Sri Lanka. An integrated macro-micro modelling approach"
publisher: Economic Modelling
uri: https://doi.org/10.1016/j.econmod.2016.07.008
pubtype: article
discipline: economy

country: Sri Lanka
period: 2009-2010
maxlength: 12
targeting: implicit
group: workers
data: national administrative Household Income and Expenditure Survey (HIES)

design: simulation
method: macro-micro computable general equilibrium model
sample: 19958
unit: household
representativeness: national
causal: 1 # 0 correlation / 1 causal

theory:
limitations: static model not able to account for transition paths; no disaggregated sectoral input-output data available
observation:
  - intervention: trade liberalization
    institutional: 1
    structural: 1
    agency: 0
    inequality: income
    type: 0 # 0 vertical / 1 horizontal
    indicator: 1 # 0 absolute / 1 relative
    measures: Atkinson index; S-Gini index; Atkinson-Gini index; Entropy index
    findings: reduced absolute poverty for tariff elimination only, mixed results but reduction for tariff elim and fiscal policy changes together; income inequality increases in long-run in all sectors
    channels: increased wage differences (esp for manager, professionals, technicians and urban workers); low-income households more dependent on private/gov transfers which do not increase with trade liberalization
    direction: 1 # -1 neg / 0 none / 1 pos
    significance: 2 # 0 nsg / 1 msg / 2 sg

notes:
annotation: |
  A simulation model on the effects of trade liberalization in Sri Lanka on income inequality and absolute poverty.
  It finds that the complete elimination of tariffs results in an overall reduction in absolute poverty, while tariff elimination with resulting fiscal policy responses to balance the budget would result in more mixed results but still pointing to an absolute reduction in poverty.
  On the other hand, income inequality is seen to increase for most sectors over the short term and for all sectors over the long term.
  The primary channels for this change are increased wage differences --- especially the increased wages for managers, professionals and technicians, as well as increased differences between urban workers ---
  and low-income households being more dependent on private or government transfers, which do not increase with trade liberalization.