Import-competition, market power and productivity change

We explore how the competitive pressure of imports affects productivity, at the firm level. There are two conflicting effects of import-competition: the pro-competitive effect fosters productivity, while the direct effect hinders it. The pro-competitive effect dominates in the steady-state, yielding free-trade as the optimal long run policy. However, under a large initial productivity gap, the firm shuts down. Here, a temporary tariff sways the firm to fight, and ensures survival, which is welfare increasing. Trade liberalization, around the steady-state, increases productivity growth and closes the gap. However, a radical liberalization kills the domestic firm. Gradualism increases the likelihood of survival, and increases welfare. -- In dem Beitrag wird untersucht, wie Wettbewerbsdruck aufgrund von Importen die Produktivität von Unternehmen beeinflußt. Zwei gegensätzliche Effekte der Importkonkurrenz sind zu unterscheiden: Der wettbewerbsfördernde Effekt begünstigt die Produktivität während der direkte Effekt sie behindert. Der wettbewerbsfördernde Effekt dominiert im stationären Gleichgewicht, das im Rahmen von freiem Handel als optimale Langfriststrategie angesehen werden kann. Besteht jedoch eine große anfängliche Produktivitätslücke, dann kommt es zu einer Schließung der Unternehmen. Hier können temporäre Zölle es ermöglichen, daß die Firmen sich im Wettbewerb behaupten und so ihr Überleben sichern, was zu einem Wohlfahrtsanstieg führt. Eine Lockerung des Freihandels bei stationärem Gleichgewicht führt zu einem Anstieg des Produktivitätswachstums und schließt die Lücke. Eine radikale Handelsliberalisierung führt jedoch zu einem Schließen des heimischen Unternehmens. Schrittweises Handeln erhöht die Wahrscheinlichkeit des Überlebens und einen Anstieg der Wohlfahrt.

Quantitative restrictions, market power and productivity growth

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Labor markets and kaleidoscopic comparative advantage

Capturing the notion of kaleidoscopic comparative advantage (Bhagwati, 1998), we show that international trade increases the volatility of profitability. In this framework, we address the labor market implications of an increase in openness, when insurance and credit markets are imperfect. With kaleidoscopic comparative advantage, trade raises the likelihood of firm shutdown and worker displacement, which, in equilibrium, affects wage contracts. In a simple model, we analyze the consequences for wage levels, earnings volatility, job instability, and income distribution, of the openness of previously nontraded industries to international trade.FLWINinfo:eu-repo/semantics/publishe

Trade liberalization, labor mobility and wages

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Wage restraint and volatility in labor markets

This paper studies the notion that a rise in job insecurity, due to rising labor market uncertainty, leads to wage moderation - the ‘wage restraint hypothesis’. It begins by finding only mixed theoretical support for this hypothesis, as an increase in uncertainty generates an ambiguous effect on wages, although it raises job insecurity. Then, using industry data, it finds evidence of wage restraint, as volatility significantly lowers the share of(production) wages in value added.info:eu-repo/semantics/publishe

Trade liberalization, labour mobility and wages

This paper analyses the labour market effects of trade liberalization, in a model where (a) labour demand uncertainty is higher in tradable industries, due to industry-specific shocks to world prices, and (b) the costs of inter-sectoral mobility are lower for skilled (i.e. educated) workers. We look at two cases: first, where labour markets are competitive and, second, where an unemployment subsidy creates rigidities. The results show an increase in the wage skill gap, a decline in the real wage and welfare of unskilled workers, and an expansion of inter-sectoral labour mobility and wage volatility. These effects are more pronounced in the case of competitive markets. Our results suggest that focusing on the traditional Stolper - Samuelson effect may underestimate the effects of international trade on labour markets.Wage-skill gap, trade and wages, wage volatility, globalization,

Wage restraint and volatility in labor markets

This paper studies the notion that a rise in job insecurity, due to rising labor market uncertainty, leads to wage moderation - the ‘wage restraint hypothesis’. It begins by finding only mixed theoretical support for this hypothesis, as an increase in uncertainty generates an ambiguous effect on wages, although it raises job insecurity. Then, using industry data, it finds evidence of wage restraint, as volatility significantly lowers the share of(production) wages in value added.Job-insecurity; Globalization; Wage Contracts; Volatility.

Imports-as-competitive-discipline: the role of the productivity gap

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Labor markets in Portugal: recent performance and challenges for development in the European context

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