Rise of Chinese trade has benefited American poor

[w¡n9Nµ7 §£@¥€r 123]

The debate on trade and wages in the U.S. has entirely focused on the impact that trade with developing countries has on the wages of the unskilled in America. This debate has overlooked the impact that trade has on prices of the goods consumed by different income groups. In particular, since developing countries typically produce low quality goods that are disproportionately consumed by the poor in America, this implies that inequality measures that do not correct for differences in the basket of goods consumed by rich and poor neglect this “price” effect of trade.

Using detailed household consumption data between 1994 and 2005, we find that this “price effect” offsets almost all the rise in inequality measured by official statistics over this period. In particular, this offsetting effect comes from the fact that non-durable inflation faced by the poor was smaller than that of the rich, the poor consume a larger share of non-durable goods –whose inflation has been smaller than for services–, and the introduction of new goods have disproportionately benefited the poor over this period. Moreover, by matching detailed US trade data with consumption patterns of households of different income groups in the US, we argue that the rise of Chinese trade has helped reduce the relative price index of the poor by around 0.3 percentage points per year. This effect alone can offset around a third of the rise in official inequality we have seen over this period.

http://faculty.chicagogsb.edu/christian.br...eInequality.pdf

[Imua 0]

The debate on trade and wages in the U.S. has entirely focused on the impact that trade with developing countries has on the wages of the unskilled in America. This debate has overlooked the impact that trade has on prices of the goods consumed by different income groups. In particular, since developing countries typically produce low quality goods that are disproportionately consumed by the poor in America, this implies that inequality measures that do not correct for differences in the basket of goods consumed by rich and poor neglect this “price” effect of trade.

Using detailed household consumption data between 1994 and 2005, we find that this “price effect” offsets almost all the rise in inequality measured by official statistics over this period. In particular, this offsetting effect comes from the fact that non-durable inflation faced by the poor was smaller than that of the rich, the poor consume a larger share of non-durable goods –whose inflation has been smaller than for services–, and the introduction of new goods have disproportionately benefited the poor over this period. Moreover, by matching detailed US trade data with consumption patterns of households of different income groups in the US, we argue that the rise of Chinese trade has helped reduce the relative price index of the poor by around 0.3 percentage points per year. This effect alone can offset around a third of the rise in official inequality we have seen over this period.

http://faculty.chicagogsb.edu/christian.br...eInequality.pdf

Two words : Dollar Stores!!!

[panamania79 2]

The debate on trade and wages in the U.S. has entirely focused on the impact that trade with developing countries has on the wages of the unskilled in America. This debate has overlooked the impact that trade has on prices of the goods consumed by different income groups. In particular, since developing countries typically produce low quality goods that are disproportionately consumed by the poor in America, this implies that inequality measures that do not correct for differences in the basket of goods consumed by rich and poor neglect this “price” effect of trade.

Using detailed household consumption data between 1994 and 2005, we find that this “price effect” offsets almost all the rise in inequality measured by official statistics over this period. In particular, this offsetting effect comes from the fact that non-durable inflation faced by the poor was smaller than that of the rich, the poor consume a larger share of non-durable goods –whose inflation has been smaller than for services–, and the introduction of new goods have disproportionately benefited the poor over this period. Moreover, by matching detailed US trade data with consumption patterns of households of different income groups in the US, we argue that the rise of Chinese trade has helped reduce the relative price index of the poor by around 0.3 percentage points per year. This effect alone can offset around a third of the rise in official inequality we have seen over this period.

http://faculty.chicagogsb.edu/christian.br...eInequality.pdf

Two words : Dollar Stores!!!

Times are tough,dollar stores ROCK !

[akdiver 3]

Benefited the Chinese poor too. Without those low paying factory jobs to produce cheap ####### for fat americans, they would have NO jobs at all!!!

Trade benefits the poor all the way around.

[panamania79 2]

Benefited the Chinese poor too. Without those low paying factory jobs to produce cheap ####### for fat americans, they would have NO jobs at all!!!

Trade benefits the poor all the way around.

They sell discontinued items and overstocks also,not just cheap ####### from China.