Trade and Real Wages of the Rich and Poor: Cross-Region Evidence
No bme6k, SocArXiv from Center for Open Science
Trade liberalization affects real-wage inequality through two channels: the distribution of nominal wages across workers and, if the rich and the poor consume different bundles of goods, the distribution of price indices across consumers. I provide a unified framework incorporating both channels by allowing for non-homothetic preferences and worker heterogeneity across jobs. Because skill-intensive goods are also high-income elastic in the data, I find an intuitive, previously unexplored, and strong interaction between the two channels. I parametrize the model for 40 regions using sector-level trade and production data, and find that trade cost reductions decrease the relative nominal wage of the poor and the relative price index for the poor in all regions. On net, real-wage inequality falls everywhere.
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:bme6k
Access Statistics for this paper
More papers in SocArXiv from Center for Open Science
Bibliographic data for series maintained by OSF ().