TRADE, WAGES, AND PRODUCTIVITY. (November 2014)

• Record Type: Journal Article
• Authors: Behrens, Kristian; Mion, Giordano; Murata, Yasusada; Südekum, Jens
• Is Part Of: International economic review. Volume 55:Number 4(2014:Nov.)
• Page Start: 1305
• Page End: 1348
• Publication Date: 2014-11
• Subjects: Economics -- Periodicals; 330.05
• DOI: 10.1111/iere.12091
• Languages: English
• ISSNs: 0020-6598

Abstract

Abstract : We develop a general equilibrium monopolistic competition model in which wages, productivity, consumption diversity, and markups respond to trade integration. We structurally estimate the model and simulate the impacts of removing all trade barriers generated by the Canada–U.S. border. Firm selection gets tougher by 8.09% in Canada and by 0.80% in the United States. Markups that consumers face, which are central to welfare, fall by up to 12.11% in Canadian provinces and by up to 2.82% in U.S. states. However, changes in markups measured at the firm level are ambiguous, thus providing a different piece of information.