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Globalization, Trade Imbalances and Inequality

Author

Listed:
  • Rafael Dix-Carneiro
  • Sharon Traiberman

Abstract

We investigate the role of trade imbalances for the distributional consequences of globalization. We do so through the lens of a quantitative, general equilibrium, multi-country, multi-sector model of trade with four key ingredients: (a) workers with different levels of skills are organized into separate representative households; (b) endogenous trade imbalances arise from households' consumption and saving decisions; (c) production exhibits capital-skill complementarity; (d) labor market frictions across sectors and non-employment. We conduct a series of counterfactual experiments that illustrate the quantitative importance of both trade imbalances and capital-skill complementarity for the dynamics of the skill premium. We show that modelling trade imbalances can lead to stark differences between short- and long-run consequences of globalization shocks for the skill premium.

Suggested Citation

  • Rafael Dix-Carneiro & Sharon Traiberman, 2022. "Globalization, Trade Imbalances and Inequality," NBER Working Papers 30188, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30188
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    Cited by:

    1. Liping Zhou & Honglin Yuan, 2024. "Effects of digital trade export on wage inequality among enterprises: evidence from China," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-16, December.
    2. Dix-Carneiro, Rafael & Kovak, Brian K., 2023. "Globalization and Inequality in Latin America," IZA Discussion Papers 16363, Institute of Labor Economics (IZA).
    3. repec:rza:wpaper:898 is not listed on IDEAS
    4. Jiang, Zhe (Jasmine), 2024. "Offshoring, firm-level adjustment and labor market outcomes," Journal of Economic Dynamics and Control, Elsevier, vol. 166(C).
    5. Yang, Han, 2024. "Dynamic trade, education and intergenerational inequality," Journal of International Economics, Elsevier, vol. 151(C).
    6. Caliendo, Lorenzo, 2023. "A comment on: Globalization, trade imbalances and inequality," Journal of Monetary Economics, Elsevier, vol. 133(C), pages 73-76.
    7. Chen, Kaijun & Liu, Xiaoling, 2024. "Does import trade liberalization affect youth human capital accumulation: Evidence from prefecture-level cities in China," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 1084-1094.

    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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