Trade may affect inequality by changing consumer prices as well as affecting workers’ wages and employment prospects.
This comment will focus on the effect of trade on consumer prices. This is a crucial issue, alongside the much-discussed question of whether greater import competition has negative effects on the prospects of certain kinds of workers in the labour market. The impacts on people as consumers and as workers are both important in shaping the effects of trade on inequality. But the way that trading arrangements affect the prices paid by different kinds of consumer is complicated.
Cite this as:
Atkin, D. (2021), ‘Trade and price-index inequality’, IFS Deaton Review of Inequalities, https://ifs.org.uk/inequality/trade-and-price-index-inequality/.