International Trade and Labor Income Risk in the United States

39 Pages Posted: 26 May 2009 Last revised: 12 Jun 2009

See all articles by Pravin Krishna

Pravin Krishna

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS); Brown University - Department of Economics; National Bureau of Economic Research (NBER)

Mine Zeynep Senses

Johns Hopkins University - SAIS

Date Written: May 2009

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.

Suggested Citation

Krishna, Pravin and Senses, Mine Zeynep, International Trade and Labor Income Risk in the United States (May 2009). NBER Working Paper No. w14992. Available at SSRN: https://ssrn.com/abstract=1408912

Pravin Krishna (Contact Author)

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS) ( email )

1740 Massachusetts Avenue, NW
Washington, DC 20036-1984
United States

Brown University - Department of Economics ( email )

64 Waterman Street
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United States

National Bureau of Economic Research (NBER)

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Mine Zeynep Senses

Johns Hopkins University - SAIS ( email )

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Washington, DC 20036-1984
United States
202-663-5687 (Phone)
202-663-7718 (Fax)

HOME PAGE: http://www.sais-jhu.edu/faculty/senses

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