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Estimating Unequal Gains across U.S. Consumers with Supplier Trade Data

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  • Colin J. Hottman
  • Ryan Monarch

Abstract

Using supplier-level trade data, we estimate the effect on consumer welfare from changes in U.S. imports both in the aggregate and for different household income groups from 1998 to 2014. To do this, we use consumer preferences which feature non-homotheticity both within sectors and across sectors. After structurally estimating the parameters of the model, using the universe of U.S. goods imports, we construct import price indexes in which a variety is defined as a foreign establishment producing an HS10 product that is exported to the United States. We find that lower income households experienced the most import price inflation, while higher income households experienced the least import price inflation during our time period. Thus, we do not find evidence that the consumption channel has mitigated the distributional effects of trade that have occurred through the nominal income channel in the United States over the past two decades.

Suggested Citation

  • Colin J. Hottman & Ryan Monarch, 2018. "Estimating Unequal Gains across U.S. Consumers with Supplier Trade Data," Working Papers 18-04, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:18-04
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    Cited by:

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    4. Xavier Jaravel & Erick Sager, 2019. "What are the price effects of trade? Evidence from the US and implications for quantitative trade models," CEP Discussion Papers dp1642, Centre for Economic Performance, LSE.
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    6. David Atkin & Benjamin Faber & Thibault Fally & Marco Gonzalez-Navarro, 2020. "Measuring Welfare and Inequality with Incomplete Price Information," NBER Working Papers 26890, National Bureau of Economic Research, Inc.
    7. Ardelean, Adina & Lugovskyy, Volodymyr, 2019. "Tariffs, product quality, and the relative prices of durables: Evidence from 1989 to 2009 U.S. microdata," European Economic Review, Elsevier, vol. 114(C), pages 54-75.
    8. Beyza Ural Marchand, 2019. "Inequality and Trade Policy: The Pro‐Poor Bias of Contemporary Trade Restrictions," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 65(S1), pages 123-152, November.
    9. Kirill Borusyak & Xavier Jaravel, 2018. "The Distributional Effects of Trade: Theory and Evidence from the United States," 2018 Meeting Papers 284, Society for Economic Dynamics.
    10. Katheryn N. Russ, 2018. "Review Of “Globalization And Inequality” By Elhanan Helpman," Israel Economic Review, Bank of Israel, vol. 16(2), pages 141-147.
    11. Jessie Handbury, 2019. "Are Poor Cities Cheap for Everyone? Non-Homotheticity and the Cost of Living Across U.S. Cities," NBER Working Papers 26574, National Bureau of Economic Research, Inc.
    12. Hottman, Colin J. & Monarch, Ryan, 2020. "A matter of taste: Estimating import price inflation across U.S. income groups," Journal of International Economics, Elsevier, vol. 127(C).
    13. Paul Piveteau & gabriel smagghue, 2018. "The Impact of Chinese Competition along the Quality Ladder," 2018 Meeting Papers 509, Society for Economic Dynamics.
    14. Jaravel, Xavier & Sager, Erick, 2019. "What are the price effects of trade? Evidence from the US for quantitative trade models," LSE Research Online Documents on Economics 103402, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    import price index; non-homotheticity; real income inequality; product variety; markups;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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