I develop a spatial-equilibrium model to quantify the distributional impacts of international trade in an economy with intranational trade and migration costs. Focusing on China, I find that international trade increases both between-region inequality among workers with similar skills and within-region inequality between skilled and unskilled workers, with the former accounting for 75 percent of the overall inequality increase. Ignoring spatial frictions will underestimate trade's impact on the overall inequality and overestimate its impact on the aggregate skill premium. I further study how internal trade and Hukou reforms affect the domestic economy and the impacts of international trade.
"Internal Geography, Labor Mobility, and the Distributional Impacts of Trade."
American Economic Journal: Macroeconomics,
Empirical Studies of Trade
Trade and Labor Market Interactions
Human Capital; Skills; Occupational Choice; Labor Productivity
Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
Socialist Systems and Transitional Economies: Factor and Product Markets; Industry Studies; Population
Socialist Institutions and Their Transitions: International Trade, Finance, Investment, Relations, and Aid
Size and Spatial Distributions of Regional Economic Activity