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Goods Trade, Factor Mobility and Welfare

  • Stephen J. Redding

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
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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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