The Distributional Effects of Trade: Theory and Evidence from the United States Xavier Jaravel (with Kirill Borusyak)

s for Paper Presentations Margins of Labor Market Adjustment to Trade Rafael Dix-Carneiro (with Brian K. Kovak) We use both longitudinal administrative data and cross-sectional household survey data to study the margins of labor market adjustment following Brazil's early 1990s trade liberalization. We document how workers and regional labor markets adjust to trade-induced changes in local labor demand, examining various adjustment margins, including earnings and wage changes; interregional migration; shifts between tradable and nontradable employment; and shifts between formal employment, informal employment, and non-employment. Our results provide insight into the regional labor market effects of trade, and have important implications for policies that address informal employment and that assist trade-displaced workers. The Margins of Trade Ana Cecilia Fieler (with Jonathan Eaton) We introduce quality differentiation into a standard quantitative, general equilibrium model of international trade. The framework allows bilateral trade to vary both at the margin of quantity and of unit value. We estimate the parameters of the model using bilateral data on trade flows and on unit values in trade. The model captures a number of regularities in the data. The Distributional Effects of Trade: Theory and Evidence from the United States Xavier Jaravel (with Kirill Borusyak) Are the gains from trade unequally distributed in society? This paper presents new evidence on the distributional effects of trade across education groups in the U.S. through both consumer prices (expenditure channel) and wages (earnings channel). Our analysis, guided by a simple quantitative trade model, leverages linked datasets that cover the entire U.S. economy and include detailed spending data on consumer packaged goods and automobiles. First, we show that the expenditure channel is distributionally neutral due to offsetting forces. College graduates spend more on services, which are largely non-traded; however, their spending on goods is skewed towards industries, firms, and brands with higher import content. Second, on the earnings side, we find that college graduates work in industries that (1) are less exposed to import competition, (2) export more, (3) are more income-elastic, and (4) use fewer imported inputs. The first three forces cause trade liberalizations to favor college graduates; the fourth has the opposite effect. Finally, we combine and quantify the expenditure and earnings channels using the model. A 10% reduction of all import and export barriers generates a modest increase in inequality between education groups, primarily due to the earnings channel. Welfare gains are 16% higher for college graduates, whose real income increases by 2.02% compared to 1.74% for individuals without a college degree. Reductions of import barriers with China have qualitatively similar implications.