Trade Policy, Income Risk, and Welfare

Trade Policy , Income Risk , and Welfare ∗

This paper studies empirically the relationship between trade policy and individual income risk faced by workers. 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. The estimated income risk parameters and data on trade barriers are then used to analyze the relationship b...

Do Not Cite Without Permission Trade Policy , Income Risk and Welfare ∗

This paper studies empirically the relationship between trade policy and individual income risk and uses the empirical estimates of this relationship to asses the welfare costs of changes in trade policy. The empirical analysis proceeds in two steps. First, longitudinal data on income of Mexican workers are used to estimate individual income risk in various manufacturing sectors. Second, the va...

Welfare Reducing Trade and Optimal Trade Policy

This paper shows that free trade reduces the welfare of a small country with unemployment unless the free trade price if the importable falls below the autarky equivalent price. A decline in the price of the importable from the autarky level not only improves the terms of trade but also reduces employment and production in the importable sector. A numerical example illustrates that the autarky ...

Income Risk, Income Mobility and Welfare

Income Risk, Income Mobility and Welfare This paper develops a framework for the quantitative analysis of individual income dynamics, mobility and welfare. Individual income is assumed to follow a stochastic process with two (unobserved) components, an i.i.d. component representing measurement error or transitory income shocks and an AR(1) component representing persistent changes in income. We...

Strategic Interaction, Trade Policy, and National Welfare