Measuring the Unequal Gains from Trade

NBER Working Paper No. 20331

Issued in July 2014, Revised in August 2015

NBER Program(s):International Trade and Investment



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.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w20331

Published: Fajgelbaum, Pablo D. and Amit K. Khandelwal (2016), "Measuring the Unequal Gains from Trade," The Quarterly Journal of Economics, 131 (3): 1113-1180. citation courtesy of

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