Across-product Versus Within-product Specialization in International Trade
This paper exploits product-level U. S. import data to test trade theory. Although the United States increasingly sources the same products from both high- and low-wage countries, unit values within products vary systematically with exporter relative factor endowments and exporter production techniques. These facts reject factor-proportions specialization across products but are consistent with such specialization within products. The data are inconsistent with new trade theory m odels predicting an inverse relationship between price and producer productivity. The existence of within-product specialization is an important consideration for understanding the impact of globalization on firms and workers, the evolution of total factor productivity, and the likelihood of long-run income convergence. © 2004 MIT Press
Volume (Year): 119 (2004)
Issue (Month): 2 (May)
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