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Goods Trade, Factor Mobility and Welfare

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Listed author(s):
  • Stephen J. Redding

Abstract

We develop a quantitative spatial model that incorporates a rich geography of trade and imperfect labor mobility between locations. We provide general results for the existence, uniqueness and comparative statics of the equilibrium. We show how the model can be used to undertake counterfactuals using only data in an initial equilibrium. In these counterfactuals, the welfare gains from trade depend on changes in both domestic trade shares and reallocations of population across locations. We show that factor mobility introduces quantitatively relevant differences in the counterfactual predictions of constant and increasing returns to scale models.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18008.

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Date of creation: Apr 2012
Publication status: published as Stephen J. Redding, 2016. "Goods trade, factor mobility and welfare," Journal of International Economics, vol 101, pages 148-167.
Handle: RePEc:nbr:nberwo:18008
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Find related papers by JEL classification:
  • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
  • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
  • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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