Working Paper: NBER ID: w14992
Authors: Pravin Krishna; Mine Zeynep Senses
Abstract: This paper studies empirically the links between international trade and labor income risk faced by workers in the United States. We use longitudinal data on workers to estimate time-varying individual income risk at the industry level. We then combine our estimates of persistent labor income risk with measures of exposure to international trade to analyze the relationship between trade and labor income risk. Importantly, by contrasting estimates from various sub-samples of workers, such as those who switched to a different industry (or sector) with those who remained in the same industry throughout the sample, we study the relative importance of the different channels through which international trade affects individual income risk. Finally, we use these estimates to conduct a welfare analysis evaluating the benefits or costs of trade through the income risk channel. We find import penetration to have a statistically significant association with labor income risk in the United States, with economically significant welfare effects.
Keywords: No keywords provided
JEL Codes: F1; F16; F4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increase in import penetration (F10) | reduction in lifetime consumption (D15) |
| import penetration (K24) | labor income risk (J39) |
| import penetration (K24) | within-industry changes in income risk (E25) |