Trade, Wages and Productivity

Kristian Behrens (), Giordano Mion, Yasusada Murata and Jens Südekum
Authors registered in the RePEc Author Service: Jens Suedekum

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We develop a new general equilibrium model of monopolistic competition with heterogeneous firms, variable demand elasticity and multiple asymmetric regions, in which trade integration induces wage and productivity changes. Using Canada-US interregional trade data, we structurally estimate a theory-based gravity equation system featuring endogenous wages and productivity. Given the estimated parameter values, we first decompose border effects into a pure border effect, relative and absolute wage effects, and a selection effect. We then quantify the impacts of removing the trade distortions generated by the Canada-US border on regional market aggregates such as wages, productivity, markups, the mass of varieties produced and consumed, as well as welfare. Last, we extend the counterfactual analysis to the firm level by generating productivity distributions and their changes via simulation.

Keywords: firm heterogeneity; monopolistic competition; general equilibrium; endogenous markups; gravity equation system; counterfactual analysis (search for similar items in EconPapers)
JEL-codes: F12 F15 F17 (search for similar items in EconPapers)
Date: 2009-07
New Economics Papers: this item is included in nep-cmp, nep-int and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

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https://cep.lse.ac.uk/pubs/download/dp0942.pdf (application/pdf)

Related works:
Journal Article: TRADE, WAGES, AND PRODUCTIVITY (2014)
Working Paper: Trade, Wages, and Productivity (2012)
Working Paper: Trade, Wages and Productivity (2009)
Working Paper: Trade, wages, and productivity (2009)
Working Paper: Trade, wages and productivity (2009)
Working Paper: Trade, wages and productivity (2009)
Working Paper: Trade, Wages, and Productivity (2008)
Working Paper: Trade, Wages, and Productivity (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0942

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