Critical Review of 'A Simple Model of Firm Heterogeneity, International Trade and Wages'
AbstractThis report critically analyses the paper "A Simple Model of Firm Heterogeneity, International Trade and Wages' authored by, Stephen Ross Yeaple. Yeaple (2005) introduces a static model in which ex-ante homogeneous firms are differentiated based on heterogeneity in technology adoption and skill selection. The process of decision making is based on comparative study of revenues and costs associated with acquisition of technology and labor. By segmenting technology into high- and low-tech, and labor into high- and low-skilled, Yeaple suggests that high-tech firms hire skilled labor at greater wages and yield the access to international market, while on the other hand, the low-tech firms hire moderate skilled labor, pay lower wages and supply to the domestic market only. Furthermore, he shows that under an open economy, a reduction in costs of international trade leads to an increase in share of high-tech (exporting) firms and induces some low-tech firms to switch to the high-tech industry.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 42334.
Date of creation: 26 Oct 2012
Date of revision:
Firm Heterogeneity; International Trade;
Find related papers by JEL classification:
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lorenzo Caliendo & Esteban Rossi-Hansberg, 2012.
"The Impact of Trade on Organization and Productivity,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 127(3), pages 1393-1467.
- Lorenzo Caliendo & Esteban Rossi-Hansberg, 2011. "The Impact of Trade on Organization and Productivity," NBER Working Papers 17308, National Bureau of Economic Research, Inc.
- Caliendo, Lorenzo & Rossi-Hansberg, Esteban, 2011. "The Impact of Trade on Organization and Productivity," CEPR Discussion Papers 8535, C.E.P.R. Discussion Papers.
- Maria Guadalupe, 2007.
"Product Market Competition, Returns to Skill, and Wage Inequality,"
Journal of Labor Economics,
University of Chicago Press, vol. 25, pages 439-474.
- María Guadalupe, 2005. "Product Market Competition Returns to Skill and Wage Inequality," CEP Discussion Papers dp0686, Centre for Economic Performance, LSE.
- Guadalupe, Maria, 2005. "Product Market Competition, Returns to Skill and Wage Inequality," IZA Discussion Papers 1556, Institute for the Study of Labor (IZA).
- Guadalupe, Maria, 2004. "Product Market Competition, Returns to Skill and Wage Inequality," CEPR Discussion Papers 4434, C.E.P.R. Discussion Papers.
- Paulo Bastos & Odd Rune Straume, 2010.
"Globalization, Product Differentiation and Wage Inequality,"
Research Department Publications
4679, Inter-American Development Bank, Research Department.
- Paulo Bastos & Odd Rune Straume, 2012. "Globalization, product differentiation, and wage inequality," Canadian Journal of Economics, Canadian Economics Association, vol. 45(3), pages 857-878, August.
- Paulo Bastos & Odd Rune Straume, . "Globalization, product differentiation and wage inequality," Discussion Papers 10/03, University of Nottingham, GEP.
- Paulo Bastos & Odd Rune Straume, 2010. "Globalization, product differentiation and wage inequality," NIPE Working Papers 8/2010, NIPE - Universidade do Minho.
- Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
- Akerlof, George A & Yellen, Janet L, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 255-83, May.
- Michael P. Keane, 1991.
"Individual heterogeneity and interindustry wage differentials,"
Discussion Paper / Institute for Empirical Macroeconomics
54, Federal Reserve Bank of Minneapolis.
- Michael P. Keane, 1993. "Individual Heterogeneity and Interindustry Wage Differentials," Journal of Human Resources, University of Wisconsin Press, vol. 28(1), pages 134-161.
- Roberto Alvarez & Ricardo López, 2005. "Exporting and performance: evidence from Chilean plants," Canadian Journal of Economics, Canadian Economics Association, vol. 38(4), pages 1384-1400, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.