Internal geography, labor mobility, and the distributional impacts of trade

Research output: Contribution to journalArticle

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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.

Original languageEnglish (US)
Pages (from-to)252-288
Number of pages37
JournalAmerican Economic Journal: Macroeconomics
Volume11
Issue number3
DOIs
StatePublished - Jul 1 2019

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

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