Measuring the Unequal Gains from Trade
Individuals that consume different baskets of goods are differentially affected by relative price changes caused by international trade. We develop a methodology to measure the unequal gains from trade across consumers within countries. The approach requires data on aggregate expenditures and parameters estimated from a non-homothetic gravity equation. We find that trade typically favors the poor, who concentrate spending in more traded sectors.
We thank Andrew Atkeson, Joaquin Blaum, Ariel Burstein, Arnaud Costinot, Robert Feenstra, Juan Carlos Hallak, Esteban Rossi-Hansberg, Nina Pavcnik, Jonathan Vogel and seminar participants at Brown, Chicago, Cowles, ERWIT, Harvard, NBER ITI, Princeton, Stanford, UCLA, USC, and the International Growth Centre meeting at Berkeley for helpful comments. We acknowledge funding from the Jerome A. Chazen Institute of International Business at Columbia Business School. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Fajgelbaum, Pablo D. and Amit K. Khandelwal (2016), "Measuring the Unequal Gains from Trade," The Quarterly Journal of Economics, 131 (3): 1113-1180. citation courtesy of