Trade and intergenerational income mobility: theory and evidence from the US

Colantone, Italo, Ottaviano, Gianmarco I. P. and Takeda, Kohei (2024) Trade and intergenerational income mobility: theory and evidence from the US. CEP Discussion Papers (CEPDP2058). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

This paper studies the impact of globalization on intergenerational income mobility. Exploiting U.S. data, we find that stronger trade exposure at the commuting zone level lowers the intergenerational income mobility of residents. In particular, higher exposure to Chinese import competition lowers the income mobility of the cohort of U.S. workers born in 1980-1982. We present a general equilibrium theory in which path dependence in sector choice of individuals over generations and mobility frictions determine the dynamics of industrial compositions across locations in a country. The theory predicts that rising import competition reduces intergenerational income mobility, consistent with the empirical findings.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2024 The Author(s)
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HC Economic History and Conditions
JEL classification:	F - International Economics > F2 - International Factor Movements and International Business F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade F - International Economics > F1 - Trade > F16 - Trade and Labor Market Interactions
Date Deposited:	13 Feb 2025 15:42
Last Modified:	13 Feb 2025 15:42
URI:	http://eprints.lse.ac.uk/id/eprint/126781

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