Trade and U.S. Inequality in the Tokyo Round

Andrew Greenland; James Lake; John Lopresti

doi:10.1162/rest.a.1774

Trade and U.S. Inequality in the Tokyo Round

Andrew Greenland¹; James Lake²; John Lopresti³

¹ North Carolina State University [email protected] · ² University of Tennessee [email protected] · ³ William & Mary [email protected]

The Review of Economics and Statistics 2026

Abstract Against a backdrop of sharply rising inequality, the Tokyo Round of the GATT resulted in a 1.6 percentage point reduction in average US tariffs – larger than CUSFTA, NAFTA, and the liberalization accompanying the granting of PNTR to China. We construct a novel IV based on the so-called “Swiss formula” that governed the Tokyo Round tariff liberalization to provide evidence of its effects on imports and inequality. Instrumented tariff reductions explain approximately 20% of the rise in income inequality between non-production and production workers between 1979 and 1988. This effect is largest among women, workers in routine occupations, and workers in more technology-intensive industries, suggesting a complementarity between trade liberalization and skill-biased technological change.

DOI: 10.1162/rest.a.1774
Pages: 1-44
Language: en
Export: BibTeX
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