International Trade with Firm Heterogeneity in Factor Shares

Julian Emami Namini ()
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Julian Emami Namini: Erasmus School of Economics, Erasmus University Rotterdam

No 09-020/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This paper presents a trade model with capital and labor as factors of production. The main contribution of this paper is that it considers a new type of firm heterogeneity, which is empirically relevant: firms in this paper differ with respect to their factor shares in production. Therefore, this paper addresses the following four empirical facts on globalization, firms’ factor shares and factor prices: (i) firms within narrowly defined industries exhibit a large degree of heterogeneity in factor shares in production; (ii) exporters are, on average, more capital intensive than non—exporters; (iii) globalization decreases labor’s share in national income; (iv) the larger the share of exporters in the industry, the larger the increase in the industry’s wages due to globalization.

Keywords: two—factor trade model; firm heterogeneity in factor shares (search for similar items in EconPapers)
JEL-codes: F12 L11 (search for similar items in EconPapers)
Date: 2009-02-24
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20090020

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