American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Internal Geography, Labor Mobility, and the Distributional Impacts of Trade
American Economic Journal: Macroeconomics
vol. 11,
no. 3, July 2019
(pp. 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.Citation
Fan, Jingting. 2019. "Internal Geography, Labor Mobility, and the Distributional Impacts of Trade." American Economic Journal: Macroeconomics 11 (3): 252–88. DOI: 10.1257/mac.20150055Additional Materials
JEL Classification
- F14 Empirical Studies of Trade
- F16 Trade and Labor Market Interactions
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- O18 Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- P23 Socialist Systems and Transitional Economies: Factor and Product Markets; Industry Studies; Population
- P33 Socialist Institutions and Their Transitions: International Trade, Finance, Investment, Relations, and Aid
- R12 Size and Spatial Distributions of Regional Economic Activity