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Trade and Intergenerational Income Mobility: Theory and Evidence from the U.S

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  • Colantone, Italo
  • Ottaviano, Gianmarco
  • Takeda, Kohei

Abstract

This paper studies the impact of globalization on intergenerational income mobility. Exploiting U.S. data, we find that stronger trade exposure at the commuting zone level lowers the intergenerational income mobility of residents. In particular, higher exposure to Chinese import competition lowers the income mobility of the cohort of U.S. workers born in 1980-1982. We present a general equilibrium theory in which path dependence in sector choice of individuals over generations and mobility frictions determine the dynamics of industrial compositions across locations in a country. The theory predicts that rising import competition reduces intergenerational income mobility, consistent with the empirical findings.

Suggested Citation

  • Colantone, Italo & Ottaviano, Gianmarco & Takeda, Kohei, 2024. "Trade and Intergenerational Income Mobility: Theory and Evidence from the U.S," FEEM Working Papers 348542, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemwp:348542
    DOI: 10.22004/ag.econ.348542
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    1. Petia Topalova, 2010. "Factor Immobility and Regional Impacts of Trade Liberalization: Evidence on Poverty from India," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 1-41, October.
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    3. Hui Ren Tan, 2023. "A Different Land of Opportunity: The Geography of Intergenerational Mobility in the Early Twentieth-Century United States," Journal of Labor Economics, University of Chicago Press, vol. 41(1), pages 77-102.
    4. Justin R. Pierce & Peter K. Schott, 2009. "A Concordance Between Ten-Digit U.S. Harmonized System Codes and SIC/NAICS Product Classes and Industries," NBER Working Papers 15548, National Bureau of Economic Research, Inc.
    5. Brian K. Kovak, 2013. "Regional Effects of Trade Reform: What Is the Correct Measure of Liberalization?," American Economic Review, American Economic Association, vol. 103(5), pages 1960-1976, August.
    6. Raj Chetty & Nathaniel Hendren & Patrick Kline & Emmanuel Saez, 2014. "Where is the land of Opportunity? The Geography of Intergenerational Mobility in the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(4), pages 1553-1623.
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    More about this item

    Keywords

    Industrial Organization; Political Economy;

    JEL classification:

    • F1 - International Economics - - Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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