Slicing the Pie: Quantifying the Aggregate and Distributional Effects of Trade
We develop a multi-sector gravity model with heterogeneous workers to quantify the aggregate and group-level welfare effects of trade. We estimate the model using the structural relationship between China-shock driven changes in manufacturing employment and average earnings across US groups defined by commuting zone and education. We find that the China shock increases average welfare but some groups experience losses as high as five times the average gain. Adjusted for plausible measures of inequality aversion, gains in social welfare are positive and only slightly lower than with the standard aggregation.
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|Date of creation:||Aug 2017|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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- Eunhee Lee, 2016. "Trade, Inequality, and the Endogenous Sorting of Heterogeneous Workers," 2016 Meeting Papers 639, Society for Economic Dynamics.
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- Pierce, Justin R. & Schott, Peter K., 2013. "The Surprisingly Swift Decline of U.S. Manufacturing Employment," Finance and Economics Discussion Series 2014-4, Board of Governors of the Federal Reserve System (U.S.).
- Justin R. Pierce & Peter K. Schott, 2014. "The Surprisingly Swift Decline of U.S. Manufacturing Employment," CESifo Working Paper Series 4563, CESifo Group Munich.
- Marcel P. Timmer & Erik Dietzenbacher & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2015. "An Illustrated User Guide to the World Input–Output Database: the Case of Global Automotive Production," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 575-605, 08.
- Raj Chetty & Adam Guren & Day Manoli & Andrea Weber, 2011. "Are Micro and Macro Labor Supply Elasticities Consistent? A Review of Evidence on the Intensive and Extensive Margins," American Economic Review, American Economic Association, vol. 101(3), pages 471-475, May.
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