Unequal Gains? The Asymmetric Impact of Tariff Policies on Income Inequality in Sub-Saharan Africa
Yiyang Liu
Co-Presenters: Individual Presentation
College: College of Business and Public Management
Major: Economics
Faculty Research Mentor: Nazif Durmaz
Abstract:
This study examines the asymmetric effects of trade policy on income inequality in sub-Saharan Africa (SSA), with democracy as a moderating factor. Using nonlinear ARDL models, we separately analyze the short- and long-run impacts of tariff increases and reductions. Results show that trade liberalization does not consistently reduce inequality—while some SSA countries benefit, others, particularly non-democratic states, experience worsening inequality. Short-term tariff cuts may increase disparities, but in democratic countries, long-run effects tend to be more equitable. Notably, tariff hikes do not always raise inequality and may even reduce it in countries like Lesotho and Senegal. These findings highlight the importance of governance and institutional quality in shaping the distributional outcomes of trade policy.