Trade, wages and productivity

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

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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)
Pages: 47 pages
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

Downloads: (external link)
http://eprints.lse.ac.uk/28609/ Open access version. (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)
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:ehl:lserod:28609

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().