Trade and Intergenerational Income Mobility: Theory and Evidence from the U.S.

Authors

Italo Colantone, Bocconi University, Baffi-Carefin Research Center and CESifoFollow
Gianmarco I.P. Ottaviano, Bocconi University, CEP and CEPRFollow
Kohei Takeda, National University of Singapore and CEP,Follow

Date of This Version

12-10-2024

Abstract

This paper studies the impact of globalization on intergenerational income mobility. Exploiting U.S. data, we find that stronger trade exposure at the commuting zone level lowers the intergenerational income mobility of residents. In particular, higher exposure to Chinese import competition lowers the income mobility of the cohort of U.S. workers born in 1980-1982. We present a general equilibrium theory in which path dependence in sector choice of individuals over generations and mobility frictions determine the dynamics of industrial compositions across locations in a country. The theory predicts that rising import competition reduces intergenerational income mobility, consistent with the empirical findings.

Recommended Citation

Colantone, Italo; Ottaviano, Gianmarco I.P.; and Takeda, Kohei, "Trade and Intergenerational Income Mobility: Theory and Evidence from the U.S." (December 10, 2024). Fondazione Eni Enrico Mattei Working Papers. Paper 1451.
https://services.bepress.com/feem/paper1451