SMU SOE Seminar (Mar 18, 2020): Dynamic Trade, Education and Intergenerational Inequality

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TOPIC:

DYNAMIC TRADE, EDUCATION AND INTERGENERATIONAL INEQUALITY

ABSTRACT In this paper, I develop a dynamic multicountry general equilibrium model to investigate channels influencing the transitional paths of trade-induced inequality. This framework incorporates human capital accumulation, capital accumulation, and capital-skill complementarity. The exact transitional path following trade liberalization is computed by applying the model to 40 countries and 6 sectors using the World Input-Output Database. In the steady state, trade liberalization increases the skill premium, skill share and real wages for both skilled and unskilled workers in all countries in the sample. The inequality consequences of trade liberalization are more severe in the short run along the transitional path. The decomposition implies that (i) the dynamics of trade-induced inequality can be explained by the flexibility to adjust the factor supply at different stages of the transition and (ii) in the long run, education eliminates 65%of trade-induced inequality on average. These results explain the observed transitional path of the skill premium in recent trade liberalization episodes in Mexico, China and Korea. This paper also argues that globalization can cause greater intergenerational inequality. Click here to view the paper. Click here to view the CV.
		PRESENTER Han Yang Academia Sinica
		RESEARCH FIELDS International Trade Macroeconomics
		DATE: 18 March 2020 (Wednesday)
		TIME: 4pm - 5.30pm
		VENUE: Meeting Room 5.1, Level 5 School of Economics Singapore Management University 90 Stamford Road Singapore 178903

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