Goods trade, factor mobility and welfare

Stephen Redding

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper extends a recent class of quantitative models of international trade to incorporate factor mobility within countries. We present a model-based decomposition of the variance of economic activity into the contributions of locational fundamentals, market access and their covariance. We show how the standard framework for undertaking model-based counterfactuals in trade can be augmented to obtain predictions for endogenous changes in the distribution of economic activity across regions within countries. A region’s trade share with itself is no longer a sufficient statistic for the welfare gains from trade, which also depend on endogenous changes in the distribution of mobile factors.

Keywords: international trade; factor mobility; welfare gains from trade (search for similar items in EconPapers)
JEL-codes: F11 F12 F16 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2012-04-25
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http://eprints.lse.ac.uk/121911/ Open access version. (application/pdf)

Related works:
Journal Article: Goods trade, factor mobility and welfare (2016)
Working Paper: Goods Trade, Factor Mobility and Welfare (2012)
Working Paper: Goods Trade, Factor Mobility and Welfare (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:121911

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