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Occupational Choice, Aggregate Productivity, and Trade

  • Meckl, Jürgen

    ()

    (Justus Liebig University, Giessen)

  • Weigert, Benjamin

    ()

    (German Council of Economic Experts)

We propose occupational decisions of heterogeneous individuals as an alternative mechanism of explaining the distribution of firm productivities emphasized by empirical studies. Thus, we integrate the frameworks of Melitz (2003), and of Manasse and Turrini (2001) that establish the theoretical base of trade models with heterogeneous firms. Our model is technically much simpler than the Melitz approach while preserving the main results on firm-selection effects due to international market integration. Our approach paves the way for detailed analysis of institutions in a heterogeneous firm model to better understand the link between institutions and an economy’s productivity distribution.

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File URL: http://ftp.iza.org/dp5497.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5497.

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Length: 15 pages
Date of creation: Feb 2011
Date of revision:
Publication status: published in: Review of Development Economics, 2013, 17 (3), 549-558
Handle: RePEc:iza:izadps:dp5497
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  1. DEL GATTO, Massimo & MION, Giordano & OTTAVIANO, Gianmarco I.P., 2006. "Trade integration, firm selection and the costs of non-Europe," CORE Discussion Papers 2006061, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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