Trade Policy, Income Risk, and Welfare

Tom Krebs, Pravin Krishna and William Maloney

No 11255, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies empirically the relationship between trade policy and individual income risk faced by workers, and uses the estimates of this empirical analysis to evaluate the welfare effect of trade reform. The analysis proceeds in three steps. First, longitudinal data on workers are used to estimate time-varying individual income risk parameters in various manufacturing sectors. Second, the estimated income risk parameters and data on trade barriers are used to analyze the relationship between trade policy and income risk. Finally, a simple dynamic incomplete-market model is used to assess the corresponding welfare costs. In the implementation of this methodology using Mexican data, we find that trade policy changes have a significant short run effect on income risk. Further, while the tariff level has an insignificant mean effect, it nevertheless changes the degree to which macroeconomic shocks affect income risk.

JEL-codes: D52 E21 F13 F16 (search for similar items in EconPapers)
Date: 2005-04
New Economics Papers: this item is included in nep-int
Note: ITI
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Citations: View citations in EconPapers (23)

Published as Tom Krebs & Pravin Krishna & William Maloney, 2010. "Trade Policy, Income Risk, and Welfare," The Review of Economics and Statistics, MIT Press, vol. 92(3), pages 467-481, October.

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Related works:
Journal Article: Trade Policy, Income Risk, and Welfare (2010)
Working Paper: Trade Policy, Income Risk and Welfare (2005)
Working Paper: Trade policy, income risk, and welfare (2005)
Working Paper: Trade Policy, Income Risk, and Welfare (2004)
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