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On the heterogeneous welfare gains and losses from trade

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  • Carroll, Daniel R.
  • Hur, Sewon

Abstract

How are the gains and losses from trade distributed across households? We document that tradable goods and services constitute a larger fraction of expenditures for low-wealth and low-income households. Using a trade model with nonhomothetic preferences and uninsurable earnings risk, we measure the differential welfare gains from trade along the income and wealth distribution. A permanent reduction in trade costs that generates the rise in import share of GDP seen in the data from 2001 to 2014 leads to 57% larger welfare gains for households in the lowest wealth decile relative to those in the highest wealth decile.

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  • Carroll, Daniel R. & Hur, Sewon, 2020. "On the heterogeneous welfare gains and losses from trade," Journal of Monetary Economics, Elsevier, vol. 109(C), pages 1-16.
    • Handle: RePEc:eee:moneco:v:109:y:2020:i:c:p:1-16
    DOI: 10.1016/j.jmoneco.2019.10.009
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. On the Heterogeneous Welfare Gains and Losses from Trade
      by Christian Zimmermann in NEP-DGE blog on 2019-11-15 02:09:41

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    6. Sewon Hur, 2023. "The Distributional Effects Of Covid‐19 And Optimal Mitigation Policies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(1), pages 261-294, February.
    7. Daniel Carroll & Sewon Hur, 2023. "On The Distributional Effects Of International Tariffs," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(4), pages 1311-1346, November.
    8. David Kohn & Fernando Leibovici & Michal Szkup, 2023. "No Credit, No Gain: Trade Liberalization Dynamics, Production Inputs, And Financial Development," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(2), pages 809-836, May.
    9. Handbury, Jessie, 2020. "Comment on “On the Heterogeneous Welfare Gains and Losses from Trade” by Daniel Carroll and Sewon Hur," Journal of Monetary Economics, Elsevier, vol. 109(C), pages 17-19.
    10. Jaravel, Xavier Laurent & Sager, Erick, 2019. "What are the price effects of trade? Evidence from the US and implications for quantitative trade models," LSE Research Online Documents on Economics 121819, London School of Economics and Political Science, LSE Library.
    11. Ma, Yong & Chen, Diandian, 2020. "Openness, rural-urban inequality, and happiness in China," Economic Systems, Elsevier, vol. 44(4).
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    More about this item

    Keywords

    Trade gains; Inequality; Consumption;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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