Essays on the Effects of Trade Liberalization.

This dissertation studies the impact of trade liberalization, at the firm level and at the industry level, on the economy of the liberalizing country. The first chapter demonstrates that in a two-tier production model the liberalization of imports of input varieties weakens local input linkages. In the model, the availability of a larger number of input varieties can enhance the productivity of a composite good. Increasing the number of imported varieties reduces the positive impact of the availability of local inputs on firm productivity. I then test this result using a panel of Hungarian manufacturing firms in the period 1995-2002, when imports of manufactures soared following trade liberalization with the European Union. I find evidence that firm productivity depends less on the availability of local inputs as firms see imports of their supplier industries increase. The second chapter is concerned with the impact of external trade liberalization on the internal geographical concentration of industries. The existing theoretical models predict that industries should further concentrate during trade liberalization. However these results hinge on specific initial conditions. I therefore answer the question empirically using the case of Hungarian industries. Using a dataset of county-industry level employment as well as trade flow data, I find evidence that higher exports in an industry increase the level of geographical concentration of the industry, particularly for industries that were initially dispersed, and at the same time reduce the share of the capital region in total employment in this industry. The third chapter investigates the effects of trade liberalization on the size distributions of exporting and non exporting plants. I consider a period of policy changes in Colombia, between 1981 and 1990, and find evidence in favor of the long-run predictions of two heterogeneous-firm models, Melitz (2003) and Melitz and Ottaviano (2008). The size distribution of exporters has shifted left and that of non-exporters has lost its tails during a period of real depreciation and of unilateral tariff increases. The leftward shift of the distribution of exporters is due to massive entry of small exporters into the export market.Ph.D.EconomicsUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/76002/1/sabined_1.pd

Service sector firm death and productivity in urban and rural locations

While the positive impact of firm productivity on survival is well documented, limited evidence exists on geographic variations of this relationship and on services industries. We show that in knowledge intensive services, this relationship is more strongly moderated in core urban areas compared to suburban and rural areas

The urban wage growth premium: sorting or learning?

This paper is concerned with the urban wage premium and addresses two central issues about which the field has not yet reached a consensus: first, the extent to which sorting of high ability individuals into urban areas explains the urban wage premium and second, whether workers receive this wage premium immediately, or through faster wage growth over time. Using a large panel of worker-level data from Britain, we first demonstrate the existence of an urban premium for wage levels, which increases in city size. We next provide evidence of a city size premium on wage growth, but show that this effect is driven purely by the increase in wage that occurs in the first year that a worker moves to a larger location. Controlling for sorting on the basis of unobservables we find no evidence of an urban wage growth premium. Experience in cities does have some impact on wage growth, however. Specifically, we show that workers who have at some point worked in a city experience faster wage growth than those who have never worked in a city

Strengthening economic linkages between Leeds and Manchester: feasibility and implications

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