The Effects of Trade Liberalisation on Income Inequality in Ukraine

This paper analyses the effects of trade liberalisation on income inequality using a computable general equilibrium (CGE) microsimulation model for Ukraine. The model follows a top-down approach, meaning that variables, such as prices and factor returns which change as a result of the simulation of trade liberalisation in the CGE model are transferred to the microsimulation model where they are treated as exogenous variables. Special focus is thereby given to intra-regional inequality. Even though the overall income distribution effects in Ukraine are rather small, they turn out to be similar in the Western and the Eastern part of the country.