Selection effects, inequality, and aggregate gains from trade

• 成果类型: Article
• 署名作者: Nigai, Sergey
• 署名单位: University of Colorado System; University of Colorado Boulder
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2023.103752
• 发表日期: 2023
• 关键词: inequality; GLOBALIZATION; gains from trade; taxation; redistribution

摘要

This paper argues that the cost of trade-induced inequality in terms of aggregate gains from trade is decreasing with globalization. I use a general equilibrium model of trade and show that at low levels of trade openness, a 1% point increase in real per capita income due to higher trade is associated with percentage point increases of 0.5, 0.85, and 0.92 in the Gini, Atkinson and Theil indices, respectively. These trade-offs, however, quickly decline upon opening up to trade and converge toward zero as trade barriers disappear. I find that at high levels of openness, more firms are exporters such that the elasticity of income inequality to reductions in trade costs converges to a constant, whereas the elasticity of average real income keeps increasing. Trade liberalization has positive marginal welfare effects for a wide range of social welfare function parameters. Existing taxation and redistributive policies can reinforce this relationship.& COPY; 2023 Elsevier B.V. All rights reserved.