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International Trade and Labour Income Risk in the U.S

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  • Mine Zeynep Senses

Abstract

This article studies empirically the links between international trade and labour income risk faced by manufacturing sector workers in the U.S. We use longitudinal data on workers to estimate time-varying individual income risk at the industry level. We then combine our estimates of persistent labour income risk with measures of exposure to international trade to analyse the relationship between trade and labour income risk. We also study risk estimates from various subsamples of workers, such as those who switched to a different manufacturing industry (or out of the manufacturing sector altogether). Finally, we use these estimates to conduct a welfare analysis evaluating the benefits or costs of trade through the income risk channel. We find import penetration to have a statistically significant association with labour income risk in the U.S. Our welfare calculations suggest that these effects are economically significant. Copyright 2014, Oxford University Press.

Suggested Citation

  • Mine Zeynep Senses, 2014. "International Trade and Labour Income Risk in the U.S," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(1), pages 186-218.
    • Handle: RePEc:oup:restud:v:81:y:2014:i:1:p:186-218
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    File URL: http://hdl.handle.net/10.1093/restud/rdt047
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    Cited by:

    1. Lyon, Spencer G. & Waugh, Michael E., 2018. "Redistributing the gains from trade through progressive taxation," Journal of International Economics, Elsevier, vol. 115(C), pages 185-202.
    2. German Cubas & Pedro Silos & Vesa Soini, 2021. "Risk and the Misallocation of Human Capital," DETU Working Papers 2103, Department of Economics, Temple University.
    3. Ursula Mello & Tomas Rodriguez Martinez, 2020. "Trade-induced Local Labor Market Shocks and Asymmetrical Labor Income Risk," Working Papers 1230, Barcelona School of Economics.
    4. Anubha Dhasmana, 2021. "Employment growth in the face of exchange rate uncertainty: The role of trade and foreign equity finance," Southern Economic Journal, John Wiley & Sons, vol. 88(1), pages 79-117, July.
    5. Deng, Liuchun & Krishna, Pravin & Senses, Mine Zeynep & Stegmaier, Jens, 2021. "Trade, Human Capital, and Income Risk," IZA Discussion Papers 14953, Institute of Labor Economics (IZA).

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