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Measuring the Unequal Gains from Trade

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  • Pablo D. Fajgelbaum
  • Amit K. Khandelwal

Abstract

Individuals that consume different baskets of goods are differentially affected by relative price changes caused by international trade. We develop a methodology to measure the unequal gains from trade across consumers within countries. The approach requires data on aggregate expenditures and parameters estimated from a non-homothetic gravity equation. We find that trade typically favors the poor, who concentrate spending in more traded sectors.

Suggested Citation

  • Pablo D. Fajgelbaum & Amit K. Khandelwal, 2014. "Measuring the Unequal Gains from Trade," NBER Working Papers 20331, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:20331
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Guest Contribution: “New Improved Trade Agreements”
      by Menzie Chinn in Econbrowser on 2015-05-12 09:27:57

    Citations

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    Cited by:

    1. Swarnali Ahmed Hannan, 2016. "The Impact of Trade Agreements; New Approach, New Insights," IMF Working Papers 16/117, International Monetary Fund.
    2. Murphy, Daniel, 2016. "Welfare consequences of asymmetric growth," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PA), pages 1-17.
    3. repec:pia:review:v:9:y:2018:i:1:n:1 is not listed on IDEAS
    4. Sébastien Jean & Ariell Reshef, 2017. "Why Trade, and What Would Be the Consequences of Protectionism?," CEPII Policy Brief 2017-18, CEPII research center.
    5. Parenti, Mathieu & Ushchev, Philip & Thisse, Jacques-François, 2017. "Toward a theory of monopolistic competition," Journal of Economic Theory, Elsevier, vol. 167(C), pages 86-115.
    6. repec:eee:inecon:v:108:y:2017:i:c:p:387-412 is not listed on IDEAS
    7. Brambilla, Irene & Porto, Guido, 2016. "Trade, Poverty Eradication, and the Sustainable Development Goals," ADBI Working Papers 629, Asian Development Bank Institute.
    8. Javier Cravino & Andrei A. Levchenko, 2017. "The Distributional Consequences of Large Devaluations," American Economic Review, American Economic Association, vol. 107(11), pages 3477-3509, November.
    9. Do, Quy-Toan & Levchenko, Andrei A., 2017. "Trade policy and redistribution when preferences are non-homothetic," Economics Letters, Elsevier, vol. 155(C), pages 92-95.
    10. Wyatt J. Brooks & Pau S. Pujolàs, 2014. "Nonlinear Gravity," Department of Economics Working Papers 2014-15, McMaster University.
    11. Thibault Fally & Benjamin Faber, 2016. "Firm Heterogeneity in Consumption Baskets: Evidence from Home and Store Scanner Data," 2016 Meeting Papers 381, Society for Economic Dynamics.
    12. Oecd, 2017. "Making trade work for all," OECD Trade Policy Papers 202, OECD Publishing.
    13. Antràs, Pol & de Gortari, Alonso & Itskhoki, Oleg, 2017. "Globalization, inequality and welfare," Journal of International Economics, Elsevier, vol. 108(C), pages 387-412.
    14. repec:eee:inecon:v:110:y:2018:i:c:p:135-150 is not listed on IDEAS
    15. Caron, Justin & Fally, Thibault & Markusen, James, 2017. "Per Capita Income and the Demand for Skills," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt96g8f3k0, Department of Agricultural & Resource Economics, UC Berkeley.
    16. Robert Z. Lawrence, 2017. "Recent Manufacturing Employment Growth: The Exception That Proves the Rule," NBER Working Papers 24151, National Bureau of Economic Research, Inc.
    17. repec:prg:jnlaop:v:2018:y:2018:i:1:id:596:p:47-66 is not listed on IDEAS
    18. David Atkin & Benjamin Faber & Marco Gonzalez-Navarro, 2015. "Retail Globalization and Household Welfare: Evidence from Mexico," CEP Discussion Papers dp1351, Centre for Economic Performance, LSE.
    19. repec:eee:streco:v:45:y:2018:i:c:p:84-93 is not listed on IDEAS
    20. repec:bfr:rueban:2018:57 is not listed on IDEAS
    21. Lawrence, Robert Z., 2018. "Recent US Manufacturing Employment: The Exception that Proves the Rule," Working Paper Series rwp18-002, Harvard University, John F. Kennedy School of Government.

    More about this item

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • F10 - International Economics - - Trade - - - General
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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