A model of firm heterogeneity in factor intensities and international trade

Emami Namini, Julian and Facchini, Giovanni and Lopez, Ricardo (2015) A model of firm heterogeneity in factor intensities and international trade. Canadian Journal of Economics, 48 (4). ISSN 1540-5982 (In Press)

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Empirical evidence suggests that exporters – besides being more productive – are significantly more skilled labor intensive than non–exporters. In a setting which captures both these features, we show that the firm selection induced by trade liberalization works along two dimensions. First, export growth increases competition for skilled labor. This leads to the exit of some of the skilled labor intensive firms, while benefitting unskilled labor intensive ones. Second, within the group of firms with the same factor intensities, the reallocation of factors is towards the exporters. We show that the increased competition for skilled labor dampens the positive effect of trade liberalization on sector–wide TFP and real income.

Item Type: Article
Additional Information: To add: "This is the peer reviewed version of the following article: [FULL CITE], which has been published in final form at [Link to final article using the DOI]. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving." ** Journal publication delayed.
Keywords: Firm dynamics, two–factor trade model, firm heterogeneity in factor intensities
Schools/Departments: University of Nottingham UK Campus > Faculty of Social Sciences > School of Economics
Depositing User: Facchini, Giovanni
Date Deposited: 10 May 2016 07:57
Last Modified: 14 Sep 2016 07:56
URI: http://eprints.nottingham.ac.uk/id/eprint/32922

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