International Trade and Earnings Inequality: A New Factor Content Approach

Rodrigo Adão, Paul Carrillo, Arnaud Costinot, Dave Donaldson and Dina Pomeranz

No 28263, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a new factor content approach to study the impact of trade on inequality. Our analysis generalizes the theoretical results of Deardorff and Staiger (1988) and improves on past empirical implementations of these results. Combined with unique administrative data from Ecuador, our approach yields measures of individual-level exposure to exports and imports, for both capital and labor income, as well as estimates of the incidence of such exposure across the income distribution. We find that international trade raises earnings inequality in Ecuador, especially in the upper-half of the income distribution. However, the drop in inequality experienced by Ecuador over the last decade would have been less pronounced in the absence of trade.

JEL-codes: D3 F1 F6 J2 (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-int and nep-lma
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Citations: View citations in EconPapers (13)

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Working Paper: International Trade and Earnings Inequality: A New Factor Content Approach (2020)
Working Paper: International Trade and Earnings Inequality: A New Factor Content Approach (2020)
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