THE IMPACT OF TRADE LIBERALIZATION ON INDUSTRIAL PRODUCTIVITY

Paul Segerstrom and Yoichi Sugita

Journal of the European Economic Association, 2015, vol. 13, issue 6, 1167-1179

Abstract: An empirical finding by Trefler (2004, “The Long and Short of the Canada–U.S. Free Trade Agreement”, American Economic Review, 94(4), 870–895) and others that industrial productivity increases more strongly in liberalized industries than in nonliberalized industries has been widely accepted as evidence for the Melitz ( , “The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity”, Econometrica, 71, 1695–1725) model. We show that under fairly standard assumptions a multi-industry version of the Melitz model does not predict this relationship. Instead, it predicts the opposite relationship that industrial productivity increases more strongly in nonliberalized industries than in liberalized industries.

Date: 2015
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Working Paper: The Impact of Trade Liberalization on Industrial Productivity (2014)
Working Paper: The Impact of Trade Liberalization on Industrial Productivity (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jeurec:v:13:y:2015:i:6:p:1167-1179

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