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The Division of Labor within Firms, Optimal Entry, and Firm Productivity

Listed author(s):
  • Koji Shintaku
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    Constructing an intra-industry trade model with division of labor within firms, this paper shows that opening up to trade improves firm productivity. Firms choose the number of markets they export. Optimal entry conditions for export markets rule out loss from opening up to trade. Under fixed export costs, opening up to trade makes some firms exit and concentrates labor to surviving firms through recruiting process and induces the division of labor. An increase in the number of markets induces firms to enter more export markets and improves firm productivity in the long run and has the reverse effect on firm productivity in the short run.

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    File URL: http://www.econ.kyoto-u.ac.jp/projectcenter/Paper/e-14-012.pdf
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    Paper provided by Graduate School of Economics Project Center, Kyoto University in its series Discussion papers with number e-14-012.

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    Length: 40 pages
    Date of creation: Dec 2014
    Handle: RePEc:kue:dpaper:e-14-012
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    Web page: http://www.econ.kyoto-u.ac.jp/projectcenter/
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    1. Gary S. Becker & Kevin M. Murphy, 1994. "The Division of Labor, Coordination Costs, and Knowledge," NBER Chapters,in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 299-322 National Bureau of Economic Research, Inc.
    2. Chaney, Thomas & Ossa, Ralph, 2013. "Market size, division of labor, and firm productivity," Journal of International Economics, Elsevier, vol. 90(1), pages 177-180.
    3. Yeaple, Stephen Ross, 2005. "A simple model of firm heterogeneity, international trade, and wages," Journal of International Economics, Elsevier, vol. 65(1), pages 1-20, January.
    4. Sofronis K. Clerides & Saul Lach & James R. Tybout, 1998. "Is Learning by Exporting Important? Micro-Dynamic Evidence from Colombia, Mexico, and Morocco," The Quarterly Journal of Economics, Oxford University Press, vol. 113(3), pages 903-947.
    5. Joachim Wagner, 2007. "Exports and Productivity: A Survey of the Evidence from Firm-level Data," The World Economy, Wiley Blackwell, vol. 30(1), pages 60-82, January.
    6. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    7. Tarlok Singh, 2010. "Does International Trade Cause Economic Growth? A Survey," The World Economy, Wiley Blackwell, vol. 33(11), pages 1517-1564, November.
    8. Baumgardner, James R, 1988. "Physicians' Services and the Division of Labor across Local Markets," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 948-982, October.
    9. Swanson, Charles E., 1999. "The division of labor and the extent of the market," Economics Letters, Elsevier, vol. 62(1), pages 135-138, January.
    10. Kamei, Keita, 2013. "Trade Liberalization, Division of Labor, and Firm Productivity," MPRA Paper 50301, University Library of Munich, Germany.
    11. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    12. 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.
    13. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-564, September.
    14. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
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