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Trade liberalization and heterogeneous within-firm productivity improvements

Author

Listed:
  • Maria Bas

    (PJSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris, PSE - Paris School of Economics)

  • Ivan Ledezma

    () (PJSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris, PSE - Paris School of Economics)

Abstract

This paper develops an intra-industry model of trade with heterogeneous firms to investigate the impact of trade on the evolution of within firm productivity. The main contribution is to incorporate endogenous labor productivity gains. Heterogeneous firms have different incentives to invest in foreign technology which in turns enhances efficiency heterogeneously. Trade liberalization reduces the price of imported capital equipment and increases factor demands. These mechanisms introduce two novel results. First, aggregate productivity increases due to within-firm productivity improvements. Second, tariffs reduction has little impact on the extensive margin of trade in countries already highly open.

Suggested Citation

  • Maria Bas & Ivan Ledezma, 2008. "Trade liberalization and heterogeneous within-firm productivity improvements," PSE Working Papers halshs-00590303, HAL.
  • Handle: RePEc:hal:psewpa:halshs-00590303
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00590303
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    File URL: https://halshs.archives-ouvertes.fr/halshs-00590303/document
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    References listed on IDEAS

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    1. Jan De Loecker & Jozef Konings, 2003. "Creative Destruction and Productivity Growth in an Emerging Economy Evidence from Slovenian Manufacturing," LICOS Discussion Papers 13803, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
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    Cited by:

    1. Jozef KONINGS & Hylke VANDENBUSSCHE, 2009. "Antidumping Protection hurts Exporters: Firm-level evidence from France," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2009017, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

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