Trade and productivity: The family connection redux

Klaus Prettner and Holger Strulik

No 159, University of Göttingen Working Papers in Economics from University of Goettingen, Department of Economics

Abstract: We investigate the effects of demographic change and human capital accumulation on trade and productivity of domestic firms. In so doing we integrate a micro-founded education and fertility decision of households into a model of international trade with firm heterogeneity. Our framework leads to four testable implications: i) the export share of a country increases in the education level of its population, ii) the export share of a country decreases in the birth rate of its population, iii) the average profitability of firms increases in the education level of a country, iv) the average profitability of firms decreases in the birth rate of a country. We find that all four implications are supported by empirical evidence for a panel of OECD countries from 1960 to 2010. Our results suggest that investments in human capital accumulation, especially in higher education, are an important determinant of a country's international competitiveness. Furthermore, falling birth rates need not be a serious concern with respect to productivity and international competitiveness of countries.

Keywords: firm heterogeneity; international competitiveness; education; fertility decline (search for similar items in EconPapers)
JEL-codes: F12 F14 I20 J11 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-dem, nep-ifn, nep-int and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Trade and productivity: The family connection redux (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cegedp:159

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