Working Paper: NBER ID: w14672
Authors: Arnaud Costinot; Jonathan Vogel
Abstract: This paper develops tools and techniques to study the impact of exogenous changes in factor supply and factor demand on factor allocation and factor prices in economies with a large number of goods and factors. The main results of our paper characterize sufficient conditions for robust monotone comparative statics predictions in a Roy-like assignment model. These general results are then used to generate new insights about the consequences of globalization.
Keywords: Globalization; Inequality; Factor Allocation; Factor Prices
JEL Codes: D33; F10; F11; J20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Exogenous changes in factor supply (F16) | Skill downgrading in the skill-abundant country (F66) |
| Exogenous changes in factor supply (F16) | Skill upgrading in the skill-scarce country (J24) |
| Increased supply of high-skill workers (J24) | Reallocation of tasks (J62) |
| Reallocation of tasks (J62) | Higher marginal returns for high-skill workers (J24) |
| Increased supply of high-skill workers (J24) | Increased inequality (F61) |
| Changes in factor demand (skill-biased technological change) (J24) | Rise in inequality within countries (D31) |
| Trade integration (F15) | Skill downgrading or upgrading (J24) |
| Trade integration (F15) | Inequality (depending on direction and correlation) (C10) |