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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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    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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