Skill bias, trade, and wage dispersion

Wage ratios between different percentiles of the wage distribution have moved in parallel and then diverged in the U.S. in the last 50 years. In this paper, I study the theoretical response of wage ratios to skill-biased technical change and trade integration. I build a simple model of heterogeneous technology and heterogeneous workers that features complementarities between the quality of ideas and abilities. I show that changes to the skill bias of technology and to trade costs can both reproduce the observed pattern since (i) they have similar asymmetric effects on productive vs. unproductive firms, and (ii) positive assortative matching in the labor market transmits this asymmetry across high and low skill workers. Focusing on the different channels through which skill-biased technical change and trade integration operate suggests ways to disentangle the magnitude of each.     

International trade,risk taking and welfare

This paper shows that the gains from opening up to international trade are smaller when firms do not fully internalize downward risk. I develop a general equilibrium model with two key assumptions. First, when faced with adverse productivity shocks, employers can lay off workers without fully paying the social costs of their layoff decisions, a common feature of many institutions. Second, when opening to international trade, the elasticity of demand perceived by an industry increases. In this setup, I show that international trade induces firms to take more risk and (i) raises the equilibrium unemployment rate, (ii) increases the volatility of sectoral sales and (iii) increases welfare proportionately less than in the absence of the externality. Inducing firms to internalize the costs of layoff (Blanchard and Tirole, 2003) therefore appears even more important in a globalized world.     

Fairness,trade, and inequality

We develop a model of international trade between two symmetric countries that features inter-group inequality between managers and workers, and also intra-group inequality within each of those two groups. Individuals are heterogeneous with respect to their managerial ability, and firms run by more able managers have a higher productivity level and make higher profits. There is rent sharing at the firm level due to fair wage preferences of workers, and hence firms with higher profits pay higher wages in equilibrium in order to elicit their workers' full effort. We show that in this framework international trade leads to a self-selection of the best firms into export status, with exporting firms having to pay a wage premium. Aggregate welfare increases, but there is also larger inequality along multiple dimensions: Involuntary unemployment and income inequality between managers and workers increase, and so does inequality within these two subgroups of individuals, as measured by the respective Gini coefficients.     

The spatial selection of heterogeneous firms

We show that heterogeneous firms choose different locations in response to market integration. Specifically, decreasing trade costs lead to the gradual agglomeration of efficient firms in the larger country where they have access to a bigger pool of consumers. In contrast, high-cost firms seek protection against competition from efficient firms by locating in the smaller country. However, when the spatial separation of markets ceases to be a sufficient protection against foreign competition, high-cost firms choose to set up in the larger market. Hence, the relationship between economic integration and international productivity gap first increases and then decreases with market integration.     

The spatial selection of heterogeneous firms

We show that heterogeneous firms choose different locations in response to market integration. Specifically, decreasing trade costs lead to the gradual agglomeration of efficient firms in the larger country where they have access to a bigger pool of consumers. In contrast, high-cost firms seek protection against competition from efficient firms by locating in the smaller country. However, when the spatial separation of markets ceases to be a sufficient protection against foreign competition, high-cost firms choose to set up in the larger market. Hence, the relationship between economic integration and international productivity gap first increases and then decreases with market integration.     

Product quality,firm heterogeneity and trade liberalization

This paper develops a framework for studying the general equilibrium effects of endogenous quality upgrading, a new margin of trade, on the welfare impact of trade liberalization. The theoretical model introduces product quality differentiation amongst heterogeneous firms and focuses on supply-side determinants of international trade. Among other results, in general equilibrium, trade liberalization decreases the share of high-quality varieties in exports and the average productivity of exporters. These changes affect average export price in opposite ways. Nevertheless, trade liberalization in the quality-extended model increases consumers’ welfare by more than in the benchmark model.     

Financial development,the choice of technology,and comparative advantage

In this general equilibrium model, banks and manufacturing firms engage in oligopolistic competition. A more advanced manufacturing technology has a higher fixed cost but a lower marginal cost of production. We show that manufacturing firms located in a country with a more efficient financial sector choose more advanced technologies and this country has a comparative advantage in the production of manufactured goods. Even though the foreign country has a less developed financial sector than the home country, the opening up of trade with the foreign country leads domestic manufacturing firms to adopt more advanced technologies. An increase in the level of efficiency in the financial sector of one country causes manufacturing firms in both countries to adopt more advanced technologies.     

Structural estimation and solution of international trade models with heterogeneous firms

We present an empirical implementation of a general-equilibrium model of international trade with heterogeneous manufacturing firms. The theory underlying our model is consistent with Melitz (2003). A nonlinear structural estimation procedure identifies a set of core parameters and unobserved firm-level trade frictions that best fit the geographic pattern of trade. Our estimation model is consistent with the specified general equilibrium model, and we conduct general equilibrium counterfactual analyses to illustrate model responses. We first assess the economic effects of reductions in measured tariffs. Taking the simple-average welfare change across regions the Melitz structure indicates welfare gains from liberalization that are four times larger than in a standard trade policy simulation. Furthermore, when we compare the economic impact of tariff reductions with reductions in estimated fixed trade costs we find that policy measures affecting the fixed costs are of greater importance than tariff barriers.     

Endogenous firm heterogeneity and the dynamics of trade liberalization

In this paper, we build a dynamic model with endogenous firm-level productivity that involves ex ante identical firms behaving differently in equilibrium. Heterogeneity arises in equilibrium as firms choose different dates to adopt a new technology. We investigate the effects of international trade on technological diffusion and show that trade has a generally positive impact on the equilibrium rate of adoption (and hence on firm-level productivity). In addition, the model can replicate the stylized fact that exporters are larger and more productive than non-exporters. Finally, we show how our model can be used to interpret the emerging empirical evidence on the firm-level productivity effects of CUSFTA.     

新新贸易理论及其进展

21世纪初诞生的新新贸易理论突破了新古典贸易理论和新贸易理论以产业为对象的研究范畴,将分析变量进一步细化到企业,以异质企业的贸易投资作为研究重点.企业异质性有两种形式,由于产业内部不同企业生产率的差异而产生的异质性以及企业组织形式差异而产生的异质性,这两种异质性紧密相连.新新贸易理论通过异质企业贸易模型的建立,阐明了现实中只有部分企业选择出口和对外直接投资的原因;通过企业内生边界模型的建立和拓展,将产业组织理论和契约理论的概念融入贸易模型,很好地解释了公司内贸易模式,并在企业全球化生产研究领域进行了理论创新.     

Cheap Imports and the Loss of US Manufacturing Jobs

This study examines the role of international trade and specifically imports from low‐wage countries, in determining patterns of job loss in U.S. manufacturing industries between 1992 and 2007. Motivated by intuitions from factor‐proportions‐inspired work on offshoring and heterogeneous firms in trade, we build industry‐level measures of import competition. Combining worker data from the Longitudinal Employer‐Household Dynamics data set, detailed establishment information from the Census of Manufactures and transaction‐level trade data, we find that rising import competition from China and other developing economies increases the likelihood of job loss among manufacturing workers with less than a high school degree; it is not significantly related to job losses for workers with at least a college degree.     

Trade and industrial location with heterogeneous labor

It is shown in the context of a new economic geography model that when labor is heterogeneous trade liberalization may lead to industrial agglomeration and inter-regional trade. Labor heterogeneity gives local monopsony power to firms but also introduces variations in the quality of the job match. Matches are likely to be better when there are more firms and workers in the local market, giving rise to an agglomeration force which can offset the forces against, trade costs and the erosion of monopsony power. A robust agglomeration equilibrium is derived analytically and its properties illustrated with numerical simulations.     

Cross-border mergers and acquisitions vs. greenfield foreign direct investment: The role of firm heterogeneity

We develop a general equilibrium model with heterogeneous firms to address two sets of questions: (1) what are the characteristics of firms that choose the various modes of foreign market access (exporting, greenfield FDI, and cross-border M&A), and (2) how does the international organization of production vary across industries and country-pairs? We show that the answers to these questions depend on the nature of firm heterogeneity. Depending on whether firms differ in their mobile or immobile capabilities, cross-border mergers involve the most or the least efficient active firms. The comparative statics on industry and country characteristics display a similar dichotomy.     

The decision to export: Firm heterogeneity,sunk costs,and spatial concentration

Integrating perspectives of the Uppsala model of internationalization process, international new ventures and trade theories of heterogeneous firms, this paper develops a dynamic discrete-choice model of export decisions by a profit-maximizing firm. Empirical analyses based on a panel data set of Chinese firms show that sunk costs, productivity, firm size, foreign ownership, industry competition and spatial concentration are positively associated with the decision to export, while state ownership has a negative association with the probability of exporting. However, we find that the relationships are not always uniform and depend on firm-specific idiosyncrasies. The results show that foreign-invested firms and large firms (regardless of ownership) rely on productivity performance related advantages for expanding overseas, while domestic firms, especially small- and medium-sized enterprises, build competitive advantage by leveraging agglomeration economies and the associated spillovers. Our results highlight the role of firm heterogeneity, sunk costs and spatial concentration in shaping the export behavior of firms.     

我国出口企业重要技能的识别及其排序

根据对我国东部经贸发达地区的800家外贸企业所进行的问卷调查,采用主成分分析法识别出8大类共56项重要出口技能,8大类技能包括国际金融、国际营销、国际贸易政策与规则、国际贸易物流、国际结算、国际贸易战略管理、国际贸易调研和国际贸易实务;通过计算均值和标准差,对88项出口技能按重要性进行了排序。实证研究发现,我国外贸企业认为对于成功出口最重要的技能是国际贸易政策与规则、国际结算和国际贸易调研类技能。总体上,我国外贸企业更重视基本的金融技能和战略管理技能;对于国际营销技能重要项目的整总体评价一般甚至有些偏低;同其他国家企业的情况相比,我国外贸企业对国际贸易物流和国际贸易实务技能的重视程度相对较低。     

Book review

The paper develops a general equilibrium model of international production and trade. Technology is carried across borders by multinational producers and the set of technologies being used in a particular country is endogenous. Production locations are chosen based on the costs of production and getting the product to market. A producer may manufacture its product in its home country, target market country, or a third country. Estimated model parameters describe the states of technology in different countries, barriers to international investment, and trade costs. It is found that the barriers to international trade and investment are highly correlated. The model is used to measure the extent of technology diffusion across countries, study the relationship between international production and trade, investigate the effects of free-trade agreements (FTAs) on offshoring, and to quantify the welfare effects of international production and trade.     

Skill Upgrading and the Real Exchange Rate

This paper examines the effect of changes in the real exchange rate on skill upgrading in the case of Chile. Using plant‐level data from the manufacturing sector, we find that a real depreciation increases the share of skilled workers in the total wage bill in exporters but not in non‐exporters. This result suggests that depreciations or, more generally, increases in export profitability, may induce exporters to adopt more skill‐intensive technologies. This finding gives support to recent models of trade that highlight the possible effect of the real exchange rate on skill upgrading and wage inequality. This paper also finds that real depreciations increase plants’ export intensity, suggesting that skill upgrading for firms that are already exporters is the channel through which real exchange depreciations affect wage inequality.     

A theory of the currency denomination of international trade

The currency denomination of international trade has significant macroeconomic and policy implications. In this paper we solve for the optimal invoicing choice by integrating this microeconomic decision at the level of the firm into a general equilibrium open economy model. Strategic interactions between firms play a critical role. We find that the less competition firms face in foreign markets, as reflected in market share and product differentiation, the more likely they will price in their own currency. We also show that when a set of countries forms a monetary union, the new currency is likely to be used more extensively in trade than the sum of the currencies it replaces.     

Exporters and Importers of Services: Firm‐Level Evidence on Italy

This work contributes to the growing literature on international trade in services at firm level. Our data set provides information on exports and imports of services (excluding transportation and travel) in 2008–09 for almost 3,000 Italian industrial and services firms, divided by partner country and type of service. We report a set of stylised facts on services trade and analyse the choice between export and foreign direct investment in services at the firm level. We find that the export and import of services are highly concentrated in just a few firms. Firm‐level variation in trade is positively correlated with firm size and productivity. Country‐level variation is to a large extent explained by the standard gravity variables: distance strongly reduces trade in services in spite of their intangibility. Smaller and less productive firms choose to export rather than sell through foreign affiliates, although there is some heterogeneity among service types.