Trade policy, income risk, and welfare
By: Tom Krebs, Pravin Krishna, William Maloney.
Contributors: Krishna, Pravin.; Maloney, William A.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11255; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11255.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Commercial policy -- Mathematical models.; Income -- Mathematical models.; Wages -- Effect of international trade on -- Mathematical models.; Public welfare -- Mathematical models.; Income -- Mexico -- Econometric models.; Wages -- Manufacturing industries -- Mexico.; Public welfare -- Mexico.; Mexico -- Commercial policy.
Description: "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"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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