Research
Research
Trade Liberalization, Structural Change, and Income Inequality: Evidence from China
Abstract:
I investigate the effects of international trade on the skill premium and interregional disparities in China, focusing on the country’s accession to theWTO. I first document a positive correlation between trade shocks and changes in the skill premium, using a prefecture-level shift-share measure of trade shocks. I then develop a spatial equilibrium trade model that includes Chinese provinces and the rest of the world. A central feature of the model is the demand-side mechanism due to non-homothetic preferences: as incomes rise, consumption shifts away from agriculture. On the supply side, the service sector is the most skill-intensive, which is consistent with the evidence I provide from Chinese data. Consequently, income growth driven by trade expands the skill-intensive sector, raising the skill premium. The spatial dimension captures heterogeneous costs of trading with the rest of the world as well as differential pace of structural change within the country. Using this framework, I quantify the impact of trade both within and across regions. Trade amplifies withinregion inequality by increasing the skill premium, especially in coastal areas, with the income mechanism contributing roughly one-third of this effect. I also find that trade widens interregional inequality as regions face unequal access to global markets. Overall, the model explains approximately 46% of the observed rise in inequality in the data.
Work in Progress:
Effects of Urban Renewal Projects on Black Workers (with Professor John McLaren, accepted for the 14th European Meeting of the Urban Economics Association, Berlin, March 28–29, 2025 )
Abstract:
We study the distributional effects of the Urban Renewal Program, implemented in the United States from 1949 to 1974, on labor-market outcomes for Black and non-Black workers. Using individual-level census data and metropolitan-area-level policy measures, we analyze differential growth in wages, employment, entrepreneurship, and homeownership between 1940 and 1980. Our instrumental variable approach finds signicant negative effects on labor-market outcomes for Black workers. However, when accounting for contemporaneous factors such as the Great Migration, rising immigration, and the Japanese import shock, multicollinearity issues prevent precise estimation of any coefficients. This prevents a definitive conclusion that the harmful labor-market effects for Black workers are due to Urban Renewal policies, rather than some combination of those other correlated factors.
Trade Liberalization and Educational Responses: Evidence from China
Abstract:
Trade liberalization has influenced labor market outcomes differently for high-skilled and low-skilled workers, as explored in my job market paper. A related question is: how do individuals respond to trade shocks in terms of human capital investment? My paper, “Trade Liberalization and Educational Responses: Evidence from China”, investigates the impact of the United States' conferral of Permanent Normal Trade Relations (PNTR) on educational decisions in China, focusing on whether the effects vary by household income level. The findings show that individuals from wealthier families are more likely to enroll in high school in response to trade openness. This suggests that trade liberalization not only affects the current generation but also has intergenerational consequences by shaping educational decisions, potentially deepening inequality.