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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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    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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