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GTAP Resource #5352

"Disentangling Distributional Effects of Trade: Incorporating U.S. Occupational Statistics into an MRIO Framework"
by Carrico, Caitlyn

Throughout the 2016 U.S. election and 2017 administration transition, there has been lively debate as to how U.S. trade policies might impact U.S. households and, particularly, workers. As consumers, households gain from trade liberalization as prices fall and real income rises. As workers, households gain from trade liberalization if sectoral expansion increases earnings. In the short-run households lose if sectoral contraction decreases workers’ earnings. However, workers in contracting sectors shift to expanding sectors, minimizing household losses. A worker’s ability to adjust depends on worker skill levels (Autor et al. 2013), timing, and locality (Caliendo et al. 2015).

In this paper, I analyze the distributional effects of trade across U.S. workers distinguished by occupation and sector in an expanded comparative static model of global supply chains, based on Walmsley et al. (2017). I use U.S. labor statistics for twenty-two occupations and fifty-seven sectors (Carrico and Tsigas 2014). I link this occupational database to a new multi-regional input-output (MRIO) database (Carrico 2017) with composite tariff rates differentiated between firms and consumers.

Incorporating this mapped occupational database into this new MRIO framework, I trace the effects of trade shocks and, in particular, changes in trade policy to households and workers. In terms of consumption, I demonstrate how changes in tariff rates affect imports demand for households relative to firms. In terms of earnings, I demonstrate how changes in tariff rates affect household earnings as sectoral expansion or contraction affects labor demand. Given the tariff escalation captured by the MRIO with differentiated tariffs, consumer response to trade shocks is greater than estimated under prior MRIO frameworks.

Resource Details (Export Citation) GTAP Keywords
Category: 2017 Conference Paper
Status: Published
By/In: Presented at the 20th Annual Conference on Global Economic Analysis, West Lafayette, IN, USA
Date: 2017
Created: Carrico, C. (4/15/2017)
Updated: Batta, G. (6/8/2017)
Visits: 2,151
- Labor market issues
- Multilateral trade negotiations
- Preferential trading arrangements
- The GTAP Data Base and extensions
- North America

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