Sorting It Out: International Trade and Protection With Heterogeneous Workers

Franziska Ohnsorge and Daniel Trefler

No 10959, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The two models of international trade with developed factor markets -- Heckscher-Ohlin and Specific Factors -- both suffer significant defects. For example, their predictions about the patterns of domestic production and international trade are for the most part either indeterminate or uselessly complex. The problem with these models is that the supply of factors to an industry is either perfectly elastic or perfectly inelastic. Using a model in which heterogeneous workers sort across industries we eliminate this problem. The result is a multi-good model with sharp predictions about (1) the domestic pattern of production, (2) North-North and North-South trade, (3) the demand for protection, (4) the determinants of domestic income distribution, and (5) the effect of trade on economic development.

JEL-codes: F11 F13 F16 J3 (search for similar items in EconPapers)
Date: 2004-12
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Published as Ohnsorge, Franziska and Daniel Trefler. “Sorting it Out: International Trade and Protection with Heterogeneous Workers.” Journal of Political Economy 115, 5 (October 2007): 868-892.

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