Year: 2022
Type: report
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.
DOI: 10.3386/w30188
Authors: Rafael Dix-Carneiro, Sharon Traiberman
Language: English
Topic: Global trade and economics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W4283712693