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96
Theories of Heterogeneous Firms and Trade.
- Annual Review of Economics.
, 2011
"... Abstract This paper reviews the new approach to international trade based on firm heterogeneity in differentiated product markets. This approach explains a variety of features exhibited in disaggregated trade data, including the higher productivity of exporters relative to non-exporters, within-ind ..."
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Cited by 36 (1 self)
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Abstract This paper reviews the new approach to international trade based on firm heterogeneity in differentiated product markets. This approach explains a variety of features exhibited in disaggregated trade data, including the higher productivity of exporters relative to non-exporters, within-industry reallocations of resources following trade liberalization, and patterns of trade participation across firms and destination markets. Accounting for these empirical patterns reveals new mechanisms through which the aggregate economy is affected by trade liberalization, including endogenous increases in average industry and firm productivity. J.E.L. CLASSIFICATION: F10, F12, F14
Trade, firms, and wages: Theory and evidence
- Review of Economic Studies
, 2012
"... Abstract: How does trade liberalization affect wages? This is the first paper to consider in theory and data how the impact of final and intermediate input tariff cuts on workers’ wages varies with the global engagement of their firm. Our model predicts that a fall in output tariffs lowers wages at ..."
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Cited by 35 (5 self)
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Abstract: How does trade liberalization affect wages? This is the first paper to consider in theory and data how the impact of final and intermediate input tariff cuts on workers’ wages varies with the global engagement of their firm. Our model predicts that a fall in output tariffs lowers wages at import-competing firms, but boosts wages at exporting firms. Similarly, a fall in input tariffs raises wages at import-using firms relative to those at firms that only source locally. Using highly detailed Indonesian manufacturing census data for the period 1991 to 2000, we find considerable support for the model’s predictions.
The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data: Dataset.” American Economic Review
, 2014
"... We employ data that match the population of Danish workers to the universe of private-sector Danish firms, with product-level trade flows by origin- and destination-countries. We document new stylized facts about offshoring and instrument for offshoring and exporting. Within job spells, offshoring i ..."
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Cited by 33 (4 self)
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We employ data that match the population of Danish workers to the universe of private-sector Danish firms, with product-level trade flows by origin- and destination-countries. We document new stylized facts about offshoring and instrument for offshoring and exporting. Within job spells, offshoring increases (decreases) the high-skilled (low-skilled) wage; exporting increases the wages of all skill-types; the net wage-effect of trade varies substantially within the same skill-type; conditional on skill, the wage-effect of offshoring varies across task characteristics. We estimate the overall effects of offshor-ing on workers ’ present and future income streams by constructing pre- offshoring-shock worker-cohorts and tracking them over time. (JEL F14, F16, J24, J31, L24) A key feature of global trade in the new century is the rapid growth of offshoring (Feenstra and Hanson 2003) and trade in intermediate goods (Hummels, Ishii, and Yi 2001). How has offshoring affected workers ’ wages? The answer to this question is not theoretically obvious. At some level purchasing an input from a foreign source must replace a task previously done by a domestic worker, which would suggest dis-
Factor Prices and International Trade: A Unifying Perspective,”NBER Working Paper 16904
, 2011
"... How do trade liberalizations a¤ect relative factor prices and to what extent do they cause factors to reallocate across sectors? We …rst present a general accounting framework that nests a wide range of models that have been used to study the link between globalization and factor prices and from whi ..."
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Cited by 19 (3 self)
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How do trade liberalizations a¤ect relative factor prices and to what extent do they cause factors to reallocate across sectors? We …rst present a general accounting framework that nests a wide range of models that have been used to study the link between globalization and factor prices and from which we obtain two su ¢ cient statistics that determine factor prices. Under some restrictions, changes in the "factor content of trade " (FCT) fully determine the impact of trade on relative factor prices. We then study the determination of the FCT in a speci…c version of our general framework that uni…es traditional models of trade and factor prices featuring sectoral productivity and factor endowment di¤erences and new models featuring imperfect competition and heterogeneous producers. We show how heterogeneous …rms’decisions shape the FCT, and, therefore, the impact of trade liberalization on relative factor prices and between-sector factor allocation.
Globalization, technology, and the skill premium: A quantitative analysis. Working Paper 16459, National Bureau of Economic Research
, 2010
"... We construct a model of international trade and multinational production (MP) to examine the impact of globalization on the skill premium in skill-abundant and skill-scarce countries. The key mechanisms in our framework arise from the interaction between three elements: asymmetric countries, technol ..."
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Cited by 16 (3 self)
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We construct a model of international trade and multinational production (MP) to examine the impact of globalization on the skill premium in skill-abundant and skill-scarce countries. The key mechanisms in our framework arise from the interaction between three elements: asymmetric countries, technological heterogeneity across producers within sectors, and skill-biased technology. Reductions in trade and/or MP costs induce a reallocation of resources towards a country’s comparative advantage sector (increasing the skill premium in skill-abundant countries and reducing it in skill-scarce countries) and within sectors towards more productive and skill-intensive producers (increasing the skill premium in all countries). We parameterize the model to match salient features of the extent and composition of trade and MP between the U.S. and skill-abundant and skill-scarce countries in 2006. We show that a reduction in trade and MP costs, moving from autarky to 2006 levels of trade and MP, increases the skill premium by 5 % in skill-abundant countries and 6 % in skill-scarce countries. Globalization accounts for between 1=9th and 1=6th of the 24 % rise in the U.S. skill premium between 1966 and 2006. MP is at least as important as international trade in generating this rise in the skill premium. We thank Francisco Alcalá, Chris Kurz, and especially Eric Verhoogen for help with their data. We are grateful to
Trade and Inequality: From Theory to Estimation ∗
"... While neoclassical theory emphasizes the impact of trade on wage inequality between occupations and sectors, more recent theories of firm heterogeneity point to the impact of trade on wage dispersion within occupations and sectors. Using linked employer-employee data for Brazil, we show that much of ..."
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Cited by 16 (1 self)
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While neoclassical theory emphasizes the impact of trade on wage inequality between occupations and sectors, more recent theories of firm heterogeneity point to the impact of trade on wage dispersion within occupations and sectors. Using linked employer-employee data for Brazil, we show that much of overall wage inequality arises within sector-occupations and for workers with similar observable characteristics; this within component is driven by wage dispersion between firms; and wage dispersion between firms is related to firm employment size and trade participation. We then extend the heterogenous-firm model of trade and inequality from Helpman, Itskhoki, and Redding (2010) and structurally estimate it with Brazilian data. We show that the estimated model fits the data well, both in terms of key moments as well as in terms of the overall distributions of wages and employment, and find that international trade is important for this fit. In the estimated model, reductions in trade
Trade Liberalization and Labor Market Dynamics
, 2011
"... I study trade-induced transitional dynamics by estimating a structural dynamic equilibrium model of the Brazilian labor market. The model features a multi-sector economy with overlapping generations, heterogeneous workers, endogenous accumulation of sector-speci c experience and costly switching of ..."
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Cited by 13 (1 self)
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I study trade-induced transitional dynamics by estimating a structural dynamic equilibrium model of the Brazilian labor market. The model features a multi-sector economy with overlapping generations, heterogeneous workers, endogenous accumulation of sector-speci c experience and costly switching of sectors. The model's estimates yield median costs of mobility ranging from 1.4 to 2.7 times annual average wages, but a high dispersion across the population. In addition, sector-speci c experience is imperfectly transferable across sectors, leading to additional barriers to mobility. Using the estimated model for counter-factual trade liberalization experiments, the main ndings are: (1) there is a large labor market response following trade liberalization but the transition may take several years; (2) potential aggregate welfare gains are signi cantly mitigated due to the delayed adjustment; (3) trade-induced welfare e ects depend on initial sector of employment and on worker demographics. The experiments also highlight the sensitivity of the transitional dynamics with respect to assumptions regarding the mobility of capital.
Exports and Within-Plant Wage Distributions: Evidence from Mexico
"... Notes: Real exchange rate calculated as e×CPI(US)/CPI(Mexico), where e is peso/US $ nominal exchange rate. ..."
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Cited by 10 (0 self)
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Notes: Real exchange rate calculated as e×CPI(US)/CPI(Mexico), where e is peso/US $ nominal exchange rate.
The Impact of Trade on Employment, Welfare, and Income Distribution in Unionized General Oligopolistic Equilibrium,
, 2009
"... Abstract This paper sets up a general oligopolistic equilibrium model with unionized labor markets. By accounting for productivity differences, the model features profit and wage differentials across industries. We use this setting to study the impact of trade liberalization on employment, welfare, ..."
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Cited by 9 (0 self)
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Abstract This paper sets up a general oligopolistic equilibrium model with unionized labor markets. By accounting for productivity differences, the model features profit and wage differentials across industries. We use this setting to study the impact of trade liberalization on employment, welfare, and the distribution of income. In particular, we show that a movement from autarky to free trade with a symmetric partner country lowers union wage claims and therefore stimulates employment and raises welfare. Whether firms can extract a larger share of rents in the open economy depends on the competitive environment as well as on the degree of centralization in union wage setting. Finally, the distribution of profit income across firm owners remains unaffected, while the distribution of wage income becomes more equal when a country opens up to trade. JEL codes: F12, F16, J51, L13
Selection into trade and wage inequality
- 2014. American Economic Journal: Microeconomics, Forthcoming
"... This paper analyzes the impact of trade integration on wage inequality when there is heterogeneity across both workers and firms. By incorporating labor assignment into the heterogeneous firms literature I develop a model in which positive assortative matching between worker skill and firm technolog ..."
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Cited by 8 (0 self)
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This paper analyzes the impact of trade integration on wage inequality when there is heterogeneity across both workers and firms. By incorporating labor assignment into the heterogeneous firms literature I develop a model in which positive assortative matching between worker skill and firm technology explains the employer size-wage premium and the exporter wage premium. Under trade, fixed export costs cause the selection of high productivity, high skill firms into exporting and an upwards shift in the firm technology distribution. Consequently, the demand for skill and wage inequality increase in all countries, both on aggregate and within the export sector. This result holds both when firms’ technologies are determined by a random draw and when technology is endogenous to firm level R&D. With endogenous technology, the increased demand for skill caused by trade liberalization results from technology upgrading by new exporters.
