abhishreshthaa
Abhijeet S
Effect of liberalization on the various cross-sections of the Indian society:
Trade liberalization led to an increase in the poverty gap in the rural districts where industries more exposed to liberalization were concentrated.
Whatever the India-wide effects, of trade liberalization were, rural areas with high concentration of industries that were disproportionately affected by tariff reductions, experienced slower progress in poverty reduction
The regionally disparate effects of liberalization are not consistent with standard trade theory predicting labour migration in reponse to wage and price shocks, equalizing the incidents of poverty across regions.
There is little evidence of high levels of free allocation with districts across industries.
Especially rigid labour markets fostered by labour market regulations in parts of India prevented the reallocation of factors in the face of trade liberalization in many areas.
As those employed in traded industries were not at the top of the income distribution before trade reforms, the reduction in income caused some to cross the poverty line or fall even deeper into poverty.
This effect was aggrevated by the slower overall growth in registered manufacturing employment areas with inflexible labour laws which retarded the pull out of poverty of the poorest subsistence farmers.
Trade liberalization led to an increase in the poverty gap in the rural districts where industries more exposed to liberalization were concentrated.
Whatever the India-wide effects, of trade liberalization were, rural areas with high concentration of industries that were disproportionately affected by tariff reductions, experienced slower progress in poverty reduction
The regionally disparate effects of liberalization are not consistent with standard trade theory predicting labour migration in reponse to wage and price shocks, equalizing the incidents of poverty across regions.
There is little evidence of high levels of free allocation with districts across industries.
Especially rigid labour markets fostered by labour market regulations in parts of India prevented the reallocation of factors in the face of trade liberalization in many areas.
As those employed in traded industries were not at the top of the income distribution before trade reforms, the reduction in income caused some to cross the poverty line or fall even deeper into poverty.
This effect was aggrevated by the slower overall growth in registered manufacturing employment areas with inflexible labour laws which retarded the pull out of poverty of the poorest subsistence farmers.
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