Agricultural trade liberalization, wage gap and welfare

A small open developing economy cannot sustain development with rise in income inequality. In the present paper we construct a four sector general equilibrium model to explore the nexus between agricultural trade liberalization and income distribution of agricultural workers and non agricultural workers. Through the paper we show that agricultural trade liberalization improves income distribution between agricultural and non agricultural workers under certain conditions. Factor specificity, factor usage and factor intensity ranking are the driving forces behind the results. In this paper we also focus on the interlinkage between agricultural trade liberalization and welfare.