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Regional Effect of Trade Liberalization on the Firm-level Exports

Author

Listed:
  • Tan, Yong
  • An, Liwei
  • Hu, Cui

Abstract

This paper extends the model of Melitz (2003) to decompose the tariff and wage effect of trade liberalization on the firm-level intensive margin of exports. The tariff effect of trade liberalization is associated with the reduction in exporting firms' variable trade costs, on the contrast, the wage effect manifests itself through increasing regional wages caused by rising local labor demand. The model shows that the two types of effects have opposite influence on the firm-level exports. The wage effect varies across regions due to the different regional industrial composition, which leads to different regional response to trade liberalization.

Suggested Citation

  • Tan, Yong & An, Liwei & Hu, Cui, 2015. "Regional Effect of Trade Liberalization on the Firm-level Exports," MPRA Paper 81811, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:81811
    as

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    File URL: https://mpra.ub.uni-muenchen.de/81811/1/MPRA_paper_81811.pdf
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    References listed on IDEAS

    as
    1. Lin, Justin Y & Wang, Gewei & Zhao, Yaohui, 2004. "Regional Inequality and Labor Transfers in China," Economic Development and Cultural Change, University of Chicago Press, vol. 52(3), pages 587-603, April.
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    3. Hasan, Rana & Mitra, Devashish & Ranjan, Priya & Ahsan, Reshad N., 2012. "Trade liberalization and unemployment: Theory and evidence from India," Journal of Development Economics, Elsevier, vol. 97(2), pages 269-280.
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    More about this item

    Keywords

    Trade Liberalization; Regional Wage; Tariff Effect; Wage Effect; Regional Effect;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F10 - International Economics - - Trade - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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