Abstract

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.

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Citation

Fajgelbaum, Pablo, and Amit Khandelwal. "Measuring the Unequal Gains from Trade." Quarterly Journal of Economics 131 (March 2016): 1113-1180.

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