Advanced Search
MyIDEAS: Login to save this paper or follow this series

Trade, Superstars, and Welfare

Contents:

Author Info

  • Bohdan Kukharskyy
Registered author(s):

    Abstract

    In recent decades, many countries experienced both a rise in top income shares and an increase of income inequality among the top earners. In this paper, I study the role of international trade as a catalyst for this development and analyze the associated welfare effects. I build a simple general equilibrium model that incorporates Lucas’ (1978) idea of individual heterogeneity regarding managerial talents into the framework of intra-industry trade with two symmetric countries. By scrutinizing effects of trade integration on entrepreneurial compensation and endogenous occupational decisions, this model can reproduce the observed pattern of income changes in the top percentiles. Despite positive joint welfare effects of trade liberalization, individual gains from trade may be non-monotonic in agents’ skills. While the welfare of workers and most productive entrepreneurs unambiguously rises, the least- and medium-productive entrepreneurs may be worse off, if their preferences for the traded goods are small enough.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.bgpe.de/texte/DP/120_Kukharskyy.pdf
    File Function: First version, 2012
    Download Restriction: no

    Bibliographic Info

    Paper provided by Bavarian Graduate Program in Economics (BGPE) in its series Working Papers with number 120.

    as in new window
    Length: 25 pages
    Date of creation: Jul 2012
    Date of revision:
    Handle: RePEc:bav:wpaper:120_kukharskyy

    Contact details of provider:
    Web page: http://www.bgpe.de/
    More information through EDIRC

    Related research

    Keywords: Distributional effects of trade; individual welfare; occupational choice; superstars.;

    Find related papers by JEL classification:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Pokrovsky Dmitry & Behrens Kristian & Zhelobodko Evgeny, 2014. "Market Size, Entrepreneurship, and Income Inequality," EERC Working Paper Series 14/01e, EERC Research Network, Russia and CIS.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:bav:wpaper:120_kukharskyy. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kamila Cygan-Rehm).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.