Internal Geography, Labor Mobility, and the Distributional Impacts of Trade

Jingting Fan

American Economic Journal: Macroeconomics, 2019, vol. 11, issue 3, 252-88

Abstract: I develop a spatial-equilibrium model to quantify the distributional impacts of international trade in an economy with intranational trade and migration costs. Focusing on China, I find that international trade increases both between-region inequality among workers with similar skills and within-region inequality between skilled and unskilled workers, with the former accounting for 75 percent of the overall inequality increase. Ignoring spatial frictions will underestimate trade's impact on the overall inequality and overestimate its impact on the aggregate skill premium. I further study how internal trade and Hukou reforms affect the domestic economy and the impacts of international trade.

JEL-codes: F14 F16 J24 O18 P23 P33 R12 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/mac.20150055
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Citations: View citations in EconPapers (79)

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