This paper studies how globalization influences intergenerational income mobility. We develop a dynamic economic geography model with overlapping generations, migration costs, and sectoral persistence. The model shows that trade shocks lower intergenerational mobility in exposed regions by depressing wage growth and restricting opportunities to move across locations and sectors. Exploiting variation in exposure to Chinese import competition across U.S. commuting zones, we provide empirical evidence that regions more exposed to trade experienced significantly lower upward mobility for the 1980?1982 birth cohort, as measured by income in early adulthood relative to parental income. Our findings reveal a dynamic dimension of the distributional consequences of trade: globalization not only shapes wages and employment in the short run but also alters opportunities for the next generation.

---

5 December 2024     Paper Number CEPDP2058

Download PDF - Trade and intergenerational income mobility: theory and evidence from the US

This CEP discussion paper is published under the centre's Trade programme.