A model of firm heterogeneity in factor intensities and international trade

Emami Namini, Julian; Facchini, Giovanni; L�pez, Ricardo

Abstract

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.

Citation

Emami Namini, J., Facchini, G., & López, R. (2015). A model of firm heterogeneity in factor intensities and international trade. Canadian Journal of Economics / Revue Canadienne d'Économique, 48(4), 1456-1480. https://doi.org/10.1111/caje.12150

• Journal Article Type: Article
• Acceptance Date: Apr 14, 2014
• Online Publication Date: May 26, 2016
• Publication Date: 2015-11
• Deposit Date: May 10, 2016
• Publicly Available Date: May 10, 2016
• Journal: Canadian Journal of Economics
• Print ISSN: 0008-4085
• Electronic ISSN: 1540-5982
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 48
• Issue: 4
• Pages: 1456-1480
• DOI: https://doi.org/10.1111/caje.12150
• Keywords: Firm dynamics, two–factor trade model, firm heterogeneity in factor intensities
• Public URL: https://nottingham-repository.worktribe.com/output/981253
• Publisher URL: https://onlinelibrary.wiley.com/doi/abs/10.1111/caje.12150
• Additional Information: This is the peer reviewed version of the following article: Emami Namini, J., Facchini, G. and López, R. A. (2015), A model of firm heterogeneity in factor intensities and international trade. Canadian Journal of Economics/Revue canadienne d'économique, 48: 1456–1480, which has been published in final form at https://onlinelibrary.wiley.com/doi/abs/10.1111/caje.12150. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
• Contract Date: May 10, 2016