Imports, Exports, and Earnings Inequality: Measures of Exposure and Estimates of Incidence

Journal Article
Published on 2 March 2022

An open access version of this article is available here from The Quarterly Journal of Economics.


The earnings of individuals depend on the demand for the factor services they supply. International trade may therefore affect earnings inequality because either (i) foreign consumers and firms demand domestic factor services in different proportions than domestic consumers and firms do, an export channel; or (ii) domestic consumers and firms change their demand for domestic factor services in response to the availability of foreign goods, an import channel. Building on this idea, we develop new measures of export and import exposure at the individual level and provide estimates of their incidence across the earnings distribution. The key input fed into our empirical analysis is a unique administrative data set from Ecuador that merges firm-to-firm transaction data, employer-employee matched data, owner-firm matched data, and firm-level customs transaction records. We find that export exposure is pro-middle class, import exposure is pro-rich, and in terms of overall incidence, the import channel is the dominant force. As a result, earnings inequality in Ecuador is higher than it would be in the absence of trade.


Rodrigo Adão

University of Chicago

Paul Ernesto Carrillo

George Washington University

Arnaud Costinot

Massachusetts Institute of Technology

Dave Donaldson

Massachusetts Institute of Technology

Dina D. Pomeranz

University of Zurich