Not all trade restrictions are created equally

There has been great focus in the recent trade theory literature on the introduction of firm heterogeneity into trade models. This introduction has highlighted the importance of the entry/exit decision of firms in response to changes in trade barriers. However, it is typical in many of these models to use iceberg transport costs as a general form of trade barriers that can be interchangeable with ad valorem tariffs. I show that this is not always an appropriate conclusion. Specifically, I illustrate that profit for an exporter is more elastic in response to tariffs than iceberg transport costs, which affects the entry/exit decision of firms. This has implications for welfare analysis and empirical specifications.     

EXPLORING ATTRITION BIAS: THE CASE OF THE KHAYELITSHA PANEL STUDY (2000-2004)

Attrition bias is a problem for users of panel data. Researchers need to know what socio‐economic factors are associated with attrition, and whether this is of relevance for the kind of analysis they want to conduct. This paper discusses attrition bias in the 2000/2004 Khayelitsha panel study. It shows that women, shack‐dwellers and people living in smaller households are more likely to attrit, but that the impact of these variables on the probability of attrition is relatively small. The implications for labour‐market analysis are then explored using Mincerian earnings functions and a probit regression on whether respondents are wage‐employed or not. The coefficients generated using a restricted sample of non‐attritors do not differ significantly from those generated by the entire sample. This suggests that attrition bias in this particular data set is not a problem for this kind of labour market analysis.     

POST-CHANDLERIAN FIRMS: TECHNOLOGICAL CHANGE AND FIRM BOUNDARIES

While the Chandlerian firm has come to dominate large sectors of advanced economies, recent studies have shown that the properties of knowledge used by firms, the dynamic nature of transaction costs, and the impact of information and communication technologies on organisations might reduce firm scale and scope. We present a contingent model of firm boundaries that explains why, as a result of technological change, firms might simultaneously outsource some activities that they had formerly preferred to produce in-house while increasing their vertical integration in other areas. We support our conclusions with evidence from different industries.