Globalization, Trade Imbalances and Inequality

Rafael Dix-Carneiro and Sharon Traiberman

No 30188, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We investigate the role of trade imbalances for the distributional consequences of globalization. We do so through the lens of a quantitative, general equilibrium, multi-country, multi-sector model of trade with four key ingredients: (a) workers with different levels of skills are organized into separate representative households; (b) endogenous trade imbalances arise from households' consumption and saving decisions; (c) production exhibits capital-skill complementarity; (d) labor market frictions across sectors and non-employment. We conduct a series of counterfactual experiments that illustrate the quantitative importance of both trade imbalances and capital-skill complementarity for the dynamics of the skill premium. We show that modelling trade imbalances can lead to stark differences between short- and long-run consequences of globalization shocks for the skill premium.

JEL-codes: F1 F16 (search for similar items in EconPapers)
Date: 2022-06
New Economics Papers: this item is included in nep-dge, nep-int and nep-lab
Note: ITI LS
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Citations: View citations in EconPapers (1)

Published as Rafael Dix-Carneiro & Sharon Traiberman, 2022. "Globalization, Trade Imbalances and Inequality," Journal of Monetary Economics, .

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Journal Article: Globalization, trade imbalances and inequality (2023)
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