TY  - JOUR
AU  - Krebs,Tom
AU  - Krishna,Pravin
AU  - Maloney,William
TI  - Trade Policy, Income Risk, and Welfare
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11255
PY  - 2005
Y2  - April 2005
UR  - http://www.nber.org/papers/w11255
L1  - http://www.nber.org/papers/w11255.pdf
N1  - Author contact info:
Tom Krebs
Department of Economics
University of Mannheim
68131 Mannheim
Germany
E-Mail: tkrebs@econ.uni-mannheim.de

Pravin Krishna
Johns Hopkins University
1740 Massachusetts Avenue, NW
Washington, DC 20036
Tel: 202/663 5733
Fax: 202/663 7718
E-Mail: Pravin_Krishna@jhu.edu

William Maloney
The World Bank
E-Mail: Wmaloney@worldbank.org
AB  - This paper studies empirically the relationship between trade policy and individual income risk faced by workers, and uses the estimates of this empirical analysis to evaluate the welfare effect of trade reform. The analysis proceeds in three steps. First, longitudinal data on workers are used to estimate time-varying individual income risk parameters in various manufacturing sectors. Second, the estimated income risk parameters and data on trade barriers are used to analyze the relationship between trade policy and income risk. Finally, a simple dynamic incomplete-market model is used to assess the corresponding welfare costs. In the implementation of this methodology using Mexican data, we find that trade policy changes have a significant short run effect on income risk. Further, while the tariff level has an insignificant mean effect, it nevertheless changes the degree to which macroeconomic shocks affect income risk.
ER  -