What gains and distributional implications result from trade liberalization?

Maria Bas and Caroline Paunov

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: This paper investigates the distributional impacts of trade liberalization across firms, consumers and workers. Using firm-product-level census data for Ecuador, we exploit exogenous tariff changes at entry to the World Trade Organization. We show that with input tariff cuts firms access higher quality and new input varieties. Consequently, firms increase their product scope and quality, while their production's skill-intensity increases and costs decrease. "Real" productivity (TFPG) increases only in the medium run, following adjustments to produce more and higher quality products. Positive immediate revenue productivity (TFPR) gains result because firms' markups increase. Consumers still gain as quality-adjusted prices decrease and varieties increase. Workers benefit differentially: skilled workers' wages rise compared to less skilled worker's wages. Input-tariff liberalization also has distributional impacts across firms. Only more productive firms with high markups increase product scope and quality and gain market shares. With output-trade liberalization the least productive firms decrease their product scope.

Keywords: gains from trade; input and output tariff reductions; product scope; product quality; market share; quantity and revenue total factor productivity (TFPQ - TFPR); skill premium; markups; price; foreign inputs quality and variety; firm-product-level data; Ecuador (search for similar items in EconPapers)
Date: 2019-02
New Economics Papers: this item is included in nep-eff and nep-int
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02052739
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in 2019

Downloads: (external link)
https://shs.hal.science/halshs-02052739/document (application/pdf)

Related works:
Working Paper: What gains and distributional implications result from trade liberalization? (2019)
Working Paper: What gains and distributional implications result from trade liberalization (2019)
Working Paper: What gains and distributional implications result from trade liberalization? (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:halshs-02052739

Access Statistics for this paper

More papers in Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL
Bibliographic data for series maintained by CCSD ().