Increasing wage inequality between similar workers plays an important role for overall inequality trends in industrialized societies. To analyze this pattern, we incorporate directed labor market search into a dynamic model of international trade with heterogeneous firms and homogeneous workers. Wage inequality across and within firms results from their different hiring needs along their life cycles and the convexity of their adjustment costs. The interaction between wage posting and firm growth explains some recent empirical regularities on firm and labor market dynamics. Fitting the model to capture key features obtained from German linked employer-employee data, we investigate how falling trade costs and institutional reforms interact in shaping labor market outcomes. Focusing on the period 1996-2007, we find that neither trade nor key features of the Hartz labor market reforms account for the sharp increase in residual inequality observed in the data. By contrast, inequality is highly responsive to the increase in product market competition triggered by domestic regulatory reform.
In New Trade Theory models, the larger region hosts an overproportionate share of producers. This Home Market Effect (HME) exacerbates regional income discrepancies caused by trade frictions or technology differences. With homogeneous firms, it requires inter-industry reallocations to emerge. We present a heterogeneous firms single-sector model with fixed market access costs, in which the HME arises exclusively from empirically more relevant intra-industry reallocations. It is magnified by lower trade costs or higher heterogeneity. In contrast to multi-industry models, a more pronounced HME leads to regional income convergence as adjustment of the firm size distribution counteracts the effects of firmentry. -- Home Market Effect ; Regional Inequality ; Monopolistic Competition ; Heterogeneous Firms ; Economic Geography
Does trade openness cause higher GDP per capita? Since the seminal instrumental variables (IV) estimates of Frankel and Romer [F&R](1999) important doubts have surfaced. Is the correlation spurious and driven by omitted geographical and institutional variables? In this paper, we generalize F&R's geography-based empirical strategy to a panel setting. We observe that natural disasters affect bilateral trade, and that this effect is conditioned by geographical variables such as distance to financial centers or area. This allows us to use interactions between geography and the incidence of disasters at the bilateral level to construct an instrument for multilateral openness that varies across countries and time. The instrument can be used in panel setups where it is possible to fully control for geographical and historical determinants of countries' performances as well as for the direct effect of disasters. We find that the elasticity of income with respect to openness is about 0.69, but that substantial heterogeneity exists across country samples.
This paper characterizes analytically the optimal tariff of a large one-sector economy with monopolistic competition and firm heterogeneity in general equilibrium, thereby extending the small-country results of Demidova and Rodriguez-Clare (JIE, 2009) and the homogeneous firms framework of Gros (JIE, 1987). The optimal tariff internalizes a markup distortion and a terms of trade externality. It is larger the higher the dispersion of firm-level productivities, and the bigger the country's relative size or relative average productivity. Furthermore, in the two-country Nash equilibrium, tariffs turn out to be strategic substitutes. Small or poor economies set lower Nash tariffs than large or rich ones. Lower transportation costs or smaller fixed market entry costs induce higher equilibrium tariffs and larger welfare losses relative to the case of zero tariffs. Similarly, cross-country productivity or size convergence increases the global welfare loss due to non-cooperative tariff policies. These results suggest that post WWII trends have increased the relative merits of the WTO.
The business literature and recent descriptive evidence show that exporting firms typically require the help of foreign trade intermediaries or need to set up own foreign wholesale affiliates. In contrast, conventional trade theory models assume that producers can directly access foreign consumers. This paper introduces intermediaries in an international trade model where producers differ with respect to productivity as well as regarding their varieties' perceived quality and tradability. We assume that trade intermediation is prone to frictions due to the absence of enforceable cross-country contracts while own wholesale subsidiaries require capital investment. We derive the sorting pattern of firms according to their degree of competitive advantage and show how the relative prevalence of intermediation depends on the degree of heterogeneity among producers, on the importance of market-specificity of goods, or on expropriation risk. We use US export data for 50 sectors and 133 destination countries to check the empirical validity of this predictions and find robust empirical support. -- Trade intermediation ; international trade, heterogeneous firms ; incomplete contracts
Abstract Since states have been fighting for power, they have used economic tactics in addition to military ones. Such trade policy measures for geopolitical purposes are discussed below. On the basis of Russia's war of aggression, the West can justify these interventions in free trade. Companies do not internalise power-political effects, therefore states should reduce these security policy externalities.
The COVID-19 virus has spread to 215 countries, virtually covering all areas of the world, and has plunged the world in a health emergency. The virus and the infection control measures by governments have an enormous, worldwide economic impact: when countries are connected by trade in goods, when a lockdown closes factories in one place of the world, essential inputs go missing in other places. And when a corona-induced recession hits one country, or when that area closes its borders for precautionary reasons, sales of goods or receipts from tourism by other countries go down, driving them into an economic crisis even when their own infection rates may be low. In this volume, edited by Gabriel Felbermayr, researchers from the Kiel Institute and from outside the institute provide answers to the pressing questions: How does the crisis change our world? Will there be lasting effects on our economies and on our societies at large? What does this mean for the worldwide living conditions? In this volume, they shed light on these questions from various angles, but always maintaining the global perspective. ; Das COVID-19-Virus hat praktisch alle Regionen der Welt erfasst und damit einen globalen gesundheitlichen Notstand ausgelöst. Das Virus und die Maßnahmen der Regierungen zur Eindämmung der Infektion haben enorme Auswirkungen auf die Weltwirtschaft: Wenn Länder durch Warenhandel miteinander verbunden sind, wenn zur Infektionsbekämpfung Fabriken an einem Ort der Welt geschlossen werden, dann gehen wichtige Vorleistungen an anderen Orten verloren. Und wenn in einem Land die Corona-Maßnahmen eine Rezession zur Folge haben oder wenn ein Land seine Grenzen aus Vorsichtsgründen schließt, gehen die Warenverkäufe oder Einnahmen aus dem Tourismus anderer Länder zurück und treiben diese in eine Wirtschaftskrise, selbst wenn ihre eigenen Infektionsraten niedrig sein mögen. In diesem Band, der von Gabriel Felbermayr herausgegeben wird, geben Forscher des Instituts für Weltwirtschaft und von außerhalb des Instituts Antworten auf die drängenden Fragen: Wie verändert die Krise unsere Welt? Wird diese dauerhafte Auswirkungen auf unsere Volkswirtschaften und auf unsere Gesellschaften haben? Was bedeutet die Krise für die weltweiten Lebensbedingungen? In diesem Band werden diese Fragen aus verschiedenen Blickwinkeln beleuchtet, aber immer unter Beibehaltung der globalen Perspektive.
Vor dem Hintergrund der Europawahlen 2019 stellt der Autor fest, dass die europafreundlichen Kräfte immer noch eine starke Zweidrittelmehrheit haben, während die EU-kritischen Parteien am rechten und linken Rand zudem häufig untereinander zerstritten sind. Dennoch drohen im neuen Parlament aufgrund der schwierigen Mehrheitsbeschaffung Hängepartien. Das EU-Parlament ist leicht freihandelsskeptischer geworden, vertritt härtere Positionen gegenüber den USA und China und tritt ökologischer auf. Bei "grünen" Themen gibt es ausgeprägte Unterschiede über die Grenzen der Mitgliedsstaaten hinweg. Der Brexit wird nach Einschätzung des Autors die Positionierung des Parlaments zu Themen des Freihandels oder der Ökologie nur sehr geringfügig verändern. ; Against the background of the 2019 European elections, the author notes that the Europe-friendly forces still have a strong two-thirds majority, while the EU-critical parties on the right and left sides are often at odds with each other. Nevertheless, the new parliament is threatened with hanging games due to the difficulty of obtaining a majority. The EU Parliament has become slightly more skeptical about free trade, takes a tougher stance towards the USA and China and is more ecologically aware. On "green" issues, there are marked differences across the borders of the member states. According to the author, the Brexit will only slightly change Parliament's position on free trade or ecology issues.
Zölle gehörten schon vor den Trump'schen Maßnahmen gegen Stahl und Aluminium zum Alltag im transatlantischen Handel. So sind auf amerikanische Pkw 10%, auf Motorräder 6%, auf Äpfel 17% und auf Weintrauben 20% fällig. Die Zölle der USA sind im Durchschnitt niedriger. Es gibt aber auch hier Zollspitzen, die den EU-Exporteuren wehtun: Bei wichtigen Milchprodukten sind durchschnittlich 20% fällig, bei Kleinlastwagen 25%, bei Handtaschen 8%, bei Babynahrung 23% und bei Schokolade 9%. Insgesamt waren Exporte der USA in die EU im Jahr 2015 mit 5,7 Mrd. US-Dollar an Zollzahlungen belastet, während Exporte der EU in die USA zu Zollzahlungen von ca. 7,1 Mrd. US-Dollar geführt haben. Trotz höherer Durchschnittszölle sind die Zollzahlungen der Europäer insgesamt geringer, weil die Importe der EU aus den USA um 150 Mrd. US-Dollar unter den Importen der USA aus der EU liegen.
