Trade liberalization and heterogeneous within-firm productivity improvements

Maria Bas and Ivan Ledezma

PSE Working Papers from HAL

Abstract: This paper develops an intra-industry model of trade with heterogeneous firms to investigate the impact of trade on the evolution of within firm productivity. The main contribution is to incorporate endogenous labor productivity gains. Heterogeneous firms have different incentives to invest in foreign technology which in turns enhances efficiency heterogeneously. Trade liberalization reduces the price of imported capital equipment and increases factor demands. These mechanisms introduce two novel results. First, aggregate productivity increases due to within-firm productivity improvements. Second, tariffs reduction has little impact on the extensive margin of trade in countries already highly open.

Keywords: endogenous productivity gains; firm heterogeneity; trade liberalization; extensive margin of trade; libéralisation du commerce; hétérogénéité des firmes; la marge extensive du commerce; gain de productivité endogène (search for similar items in EconPapers)
Date: 2008-06
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00590303v1
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Citations: View citations in EconPapers (2)

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Working Paper: Trade liberalization and heterogeneous within-firm productivity improvements (2008)
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