International Trade Patterns, the Skill Premium, and Heterogeneous Firms
AbstractWe study the response of factor allocation and the skill premium to trade liberalizations in a model that combines exogenous determinants of comparative advantage--that result from sectoral productivity and factor endowment differences across countries--with endogenous determinants of comparative advantage--that result from the entry and production decisions of heterogeneous firms. We show how (i) productivity heterogeneity across firms, (ii) endogenous selection of firms into production and export markets, and (iii) endogenous firm entry---the determinants of endogenous comparative advantage---affect the response of factor allocation and the skill premium to trade liberalizations. The impact of these three margins on the skill premium, however, is fully reflected in sectoral trade patterns, which determine the factor content of trade.
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Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2010 Meeting Papers with number 1247.
Date of creation: 2010
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Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
Web page: http://www.EconomicDynamics.org/society.htm
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- Ariel Burstein & Jonathan Vogel, 2010. "Globalization, Technology, and the Skill Premium: A Quantitative Analysis," NBER Working Papers 16459, National Bureau of Economic Research, Inc.
- Ariel Burstein, 2010. "The Research Agenda: Ariel Burstein on International Trade and Macroeconomics," EconomicDynamics Newsletter, Review of Economic Dynamics, vol. 12(1), November.
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