Trade policy, income risk, and welfare

Arbeitspapier

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 between trade policy and income risk. Finally, a simple dynamic general equilibrium model with incomplete markets is used 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2004-09

Classification and Topics

• Classification: Wirtschaft ; Incomplete Markets ; Macroeconomics: Consumption; Saving; Wealth ; Trade Policy; International Trade Organizations
• Subject: Trade Policy ; Income Risk ; Macroeconomics ; Außenhandelspolitik ; Einkommen ; Risiko ; Verarbeitendes Gewerbe ; Dynamisches Gleichgewicht ; Schätzung ; Mexiko

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Krebs, Tom ; Krishna, Pravin ; Maloney, William
• Event: Veröffentlichung
• (who): Brown University, Department of Economics
• (where): Providence, RI
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/80084
• Last update: 10.03.2025, 11:44 AM CET