Felipe Brugues: Inequality Dynamics and Trade in Ecuador

Felipe Brugues is working on a series of papers on trade in Ecuador. Ecuador is an open economy that depends heavily on the exports of commodities, and at the same time, possesses enough state capacity to have detailed information on owners, managers, workers, the structure of supply chains, and the performance of private firms. In the last decade, the country has experienced a large decrease in inequality, with the Gini coefficient falling from 54 in 2007 to 46 points in 2015, and a corresponding decrease in the income share of the top 1%. In one paper, Brugues and co-authors are examining the extent to which the decline in income inequality was driven by a series of trade shocks and a decrease in the international exposure of asset holdings of the wealthy. They are also constructing a simulation model to examine how trade policy affects inequality. In a second paper, Brugues is examining how contracts in supply chains, particularly between large and small firms, and similarly between firms and workers, reflect implicit insurance with respect to trade shocks. Such a phenomenon may explain the observed effect of shocks on inequality.

Component Location