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

Author

Listed:
  • Italo Colantone

    (Bocconi University, Baffi Research Centre, GREEN Research Centre, CESifo and Fondazione Eni Enrico Mattei)

  • Gianmarco I.P. Ottaviano

    (Bocconi University, Baffi Research Centre, CEP, CEPR and IGIER)

  • Kohei Takeda

    (National University of Singapore and CEP)

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

  • Italo Colantone & Gianmarco I.P. Ottaviano & Kohei Takeda, 2024. "Trade and Intergenerational Income Mobility: Theory and Evidence from the U.S," Working Papers 2024.29, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2024.29
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    References listed on IDEAS

    as
    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.
    2. 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.
    3. Claudia Goldin & Lawrence F. Katz, 1997. "Why the United States Led in Education: Lessons from Secondary School Expansion, 1910 to 1940," NBER Working Papers 6144, National Bureau of Economic Research, Inc.
    4. 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.
    5. Lorenzo Caliendo & Maximiliano Dvorkin & Fernando Parro, 2019. "Trade and Labor Market Dynamics: General Equilibrium Analysis of the China Trade Shock," Econometrica, Econometric Society, vol. 87(3), pages 741-835, May.
    6. 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.
    7. 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.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Import competition; Distributional consequences; Intergenerational income mobility;
    All these keywords.

    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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    This paper has been announced in the following NEP Reports:

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