Imports, Exports, and Earnings Inequality: Measures of Exposure and Estimates of Incidence
Name
qjac012.pdf
Description
Published version
Size
1.08 MB
Format
Adobe PDF
Checksum (MD5)
170eb3943cfff6f4cc8d0e185775525d
Author(s)
Adão, Rodrigo
Carrillo, Paul
Costinot, Arnaud
Donaldson, Dave
Pomeranz, Dina
Date Issued
2022
Journal
Quarterly Journal of Economics
Publisher
Oxford University Press (OUP)
Citation
Adão, Rodrigo, Carrillo, Paul, Costinot, Arnaud, Donaldson, Dave and Pomeranz, Dina. 2022. "Imports, Exports, and Earnings Inequality: Measures of Exposure and Estimates of Incidence." Quarterly Journal of Economics, 137 (3).
Version
Final published version
Abstract
Abstract
The earnings of individuals depend on the demand for the factor services they supply. International trade may therefore affect earnings inequality because either (i) foreign consumers and firms demand domestic factor services in different proportions than domestic consumers and firms do, an export channel; or (ii) domestic consumers and firms change their demand for domestic factor services in response to the availability of foreign goods, an import channel. Building on this idea, we develop new measures of export and import exposure at the individual level and provide estimates of their incidence across the earnings distribution. The key input fed into our empirical analysis is a unique administrative data set from Ecuador that merges firm-to-firm transaction data, employer-employee matched data, owner-firm matched data, and firm-level customs transaction records. We find that export exposure is pro-middle class, import exposure is pro-rich, and in terms of overall incidence, the import channel is the dominant force. As a result, earnings inequality in Ecuador is higher than it would be in the absence of trade.
The earnings of individuals depend on the demand for the factor services they supply. International trade may therefore affect earnings inequality because either (i) foreign consumers and firms demand domestic factor services in different proportions than domestic consumers and firms do, an export channel; or (ii) domestic consumers and firms change their demand for domestic factor services in response to the availability of foreign goods, an import channel. Building on this idea, we develop new measures of export and import exposure at the individual level and provide estimates of their incidence across the earnings distribution. The key input fed into our empirical analysis is a unique administrative data set from Ecuador that merges firm-to-firm transaction data, employer-employee matched data, owner-firm matched data, and firm-level customs transaction records. We find that export exposure is pro-middle class, import exposure is pro-rich, and in terms of overall incidence, the import channel is the dominant force. As a result, earnings inequality in Ecuador is higher than it would be in the absence of trade.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Creative Commons Attribution-NonCommercial-NoDerivs License
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1093/QJE/QJAC012
