Comparative Advantage
In: Encyclopedia of Business Ethics and Society, Forthcoming
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In: Encyclopedia of Business Ethics and Society, Forthcoming
SSRN
In: Globalisation, Comparative Advantage and the Changing Dynamics of Trade, p. 27-39
We develop a model of trade between identical countries. Workers endogenously acquire skills that are imperfectly observed by firms, who therefore use aggregate country investment as the prior when evaluating workers. This creates an informational externality interacting with general equilibrium effects on each country's skill premium. Asymmetric equilibria with comparative advantages exist even when there is a unique equilibrium under autarky. Symmetric, no-trade equilibria may be unstable under free trade. Welfare effects are ambiguous: trade may be Pareto improving even if it leads to an equilibrium with rich and poor countries, with no special advantage to country size.
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In: The International trade journal, Volume 25, Issue 3, p. 305-348
ISSN: 1521-0545
In: Journal of political economy, Volume 129, Issue 3, p. 871-939
ISSN: 1537-534X
SSRN
Working paper
In: Canadian public policy: Analyse de politiques, Volume 14, Issue 1, p. 113
ISSN: 1911-9917
In: Research policy: policy, management and economic studies of science, technology and innovation, Volume 51, Issue 8, p. 104143
ISSN: 1873-7625
SSRN
Working paper
In: NBER working paper series 13963
"China's trade pattern is influenced not just by its overall comparative advantage in labor intensive goods but also by geography. We use two variants of the Eaton-Kortum (2002) model to study China's local comparative advantage. The theory predicts that China's share of export markets should grow most rapidly where China's share is initially large. A corollary is that exporters that have a big market share where China's share is initially large should see the largest fall in their market shares. These market share change predictions are strongly supported in the data from 1996 to 2006. We also show theoretically that since trade costs are proportional to weight rather than value, relative distance affects local comparative advantage as well as the overall volume of trade. The model predicts that China has a comparative advantage in heavy goods in nearby markets, and lighter goods in more distant markets. This theory motivates a simple empirical prediction: within a product, China's export unit values should be increasing in distance. We find strong support for this effect in our empirical analysis on product-level Chinese exports in 2006"--National Bureau of Economic Research web site
In: FRB St. Louis Working Paper No. 2019-16
SSRN
Working paper
In: NBER working paper series 13231
We introduce worker differences in labor supply, reflecting differences in skills and assets, into a model of separations, matching, and unemployment over the business cycle. Separating from employment when unemployment duration is long is particularly costly for workers with high labor supply. This provides a rich set of testable predictions across workers: those with higher labor supply, say due to lower assets, should display more procyclical wages and less countercyclical separations. Consequently, the model predicts that the pool of unemployed will sort toward workers with lower labor supply in a downturn. Because these workers generate lower rents to employers, this discourages vacancy creation and exacerbates the cyclicality of unemployment and unemployment durations. We examine wage cyclicality and employment separations over the past twenty years for workers in the Survey of Income and Program Participation (SIPP). Wages are much more procyclical for workers who work more. This pattern is mirrored in separations; separations from employment are much less cyclical for those who work more. We do see for recessions a strong compositional shift among those unemployed toward workers who typically work less.
In: Journal of international economics, Volume 82, Issue 2, p. 181-194
ISSN: 0022-1996