Measuring the Unequal Gains from Trade
53 Pages Posted: 28 Jul 2014 Last revised: 22 Jul 2021
Date Written: July 2014
Individuals that consume different baskets of goods are differentially affected by relative price changes caused by international trade. We develop a methodology to measure the unequal gains from trade across consumers within countries. The approach requires data on aggregate expenditures and parameters estimated from a non-homothetic gravity equation. We find that trade typically favors the poor, who concentrate spending in more traded sectors.
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