Regional trade agreements and income inequality: Are there any differences between bilateral and plurilateral agreements?

Abstract

This study addresses the trade-inequality relationship by investigating how participation in RTAs is associated with the within-country income inequality based on panel data from 125 countries between 1980 and 2015. Specifically, we evaluate the roles of bilateral and plurilateral RTAs in relating to income inequality in developing and developed countries and their possible differences. The results show that bilateral RTAs reduce income inequality in developing countries; however, there is less clear evidence in developed countries. The analysis also presents no clear evidence of the relationship between plurilateral RTAs and income inequality, irrespective of countries’ development stages.