Working Paper: NBER ID: w27133
Authors: Ryan Kim; Jonathan Vogel
Abstract: What are the welfare implications of trade shocks? We provide a sufficient statistic that measures changes in welfare, to a first-order approximation, taking into account adjustment in labor supply, in frictional unemployment, and in the sectors to which workers apply while allowing for arbitrary heterogeneity in worker productivity and nonpecuniary returns across sectors. We apply these insights to measure changes in welfare across commuting zones (CZs) in the U.S. between 2000-2007. We find that granting China permanent normal trade relations lowers the welfare of a CZ at the 90th percentile of exposure by 3.1 percentage points relative to a CZ at the 10th percentile; of this, approximately 65 percent is due to changes in unemployment and much of this is driven by the non-pecuniary costs of unemployment.
Keywords: No keywords provided
JEL Codes: F1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Granting PNTR to China (F13) | Welfare of a CZ (I30) |
| Changes in unemployment (J64) | Welfare of a CZ (I30) |
| Trade policy changes (F13) | Unemployment rates (J64) |
| Trade policy changes (F13) | Wages per efficiency unit (J33) |
| Welfare of a CZ (I30) | Changes in unemployment (J64) |