Topic: Entrepreneurial Income Inequality, Aggregate Saving and Gains from Trade

Speaker: TANG Lixin

Abstract: What are the effects of globalization on the income inequality among entrepreneurs? Do the effects on entrepreneurial inequality have welfare implications for workers? To study these questions, I document three stylized facts relating trade openness, income equality among entrepreneurs and aggregate saving. I then develop a dynamic model of trade to reconcile these stylized facts. In the model, an increase in trade openness raises the share of total profits by the most productive entrepreneurs who have the highest saving rates, leading to increased capital accumulation. Quantitative analysis shows that the novel mechanism in the model increases the wage gains from trade by 25.0% and the gains in aggregate output by 36.8% than in a comparable benchmark.

Date: Wednesday, May 8, 2019

Time: 14:00-15:30

Location: Room 702, Academic Hall, City Campus, CUFE