International Trade and Labor Income Risk in the United States

Pravin Krishna and Mine Senses

No 14992, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies empirically the links between international trade and labor income risk faced by workers in the United States. We use longitudinal data on workers to estimate time-varying individual income risk at the industry level. We then combine our estimates of persistent labor income risk with measures of exposure to international trade to analyze the relationship between trade and labor income risk. Importantly, by contrasting estimates from various sub-samples of workers, such as those who switched to a different industry (or sector) with those who remained in the same industry throughout the sample, we study the relative importance of the different channels through which international trade affects individual income risk. 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 labor income risk in the United States, with economically significant welfare effects.

JEL-codes: F1 F16 F4 (search for similar items in EconPapers)
Date: 2009-05
New Economics Papers: this item is included in nep-int and nep-rmg
Note: ITI
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Citations: View citations in EconPapers (13)

Published as Review of Economic Studies (2014) 81 (1): 186-218. doi: 10.1093/restud/rdt047

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Working Paper: International Trade and Labor Income Risk in the United States (2009)
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