Publication

Trade Liberalization, Firm Heterogeneity, and Labor Layoffs: An Empirical Investigation

2011
Working Papers

Abstract

This is the first empirical attempt to provide evidence for the interaction between firm-level total factor productivity and trade liberalization as key determinants of firm-level job destruction caused by trade. Employing an original US firm-level data, we test and find support for theoretical predictions from Melitz (2003), whose model we use to derive an explicit equation relating firm productivity and trade-induced layoffs when a country liberalizes its trade policy. In addition, we incorporate intuitive labor market interactions that are not explicitly captured in Melitz's model. These allow us to reconcile some discrepancies between theory and empirical work.

Official source

https://infoscience.epfl.ch/entities/publication/5d422306-155b-4a22-baeb-4759321aa72d

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2011
Working Papers

Abstract

Official source

https://infoscience.epfl.ch/entities/publication/5d422306-155b-4a22-baeb-4759321aa72d

About this result

Related concepts (32)

Empirical research

Empirical research is research using empirical evidence. It is also a way of gaining knowledge by means of direct and indirect observation or experience. Empiricism values some research more than other kinds. Empirical evidence (the record of one's direct observations or experiences) can be analyzed quantitatively or qualitatively. Quantifying the evidence or making sense of it in qualitative form, a researcher can answer empirical questions, which should be clearly defined and answerable with the evidence collected (usually called data).

Free trade

Free trade is a trade policy that does not restrict imports or exports. In government, free trade is predominantly advocated by political parties that hold economically liberal positions, while economic nationalist and left-wing political parties generally support protectionism, the opposite of free trade. Most nations are today members of the World Trade Organization multilateral trade agreements. Free trade was best exemplified by the unilateral stance of Great Britain who reduced regulations and duties on imports and exports from the mid-nineteenth century to the 1920s.

Production (economics)

Production is the process of combining various inputs, both material (such as metal, wood, glass, or plastics) and immaterial (such as plans, or knowledge) in order to create output. Ideally this output will be a good or service which has value and contributes to the utility of individuals. The area of economics that focuses on production is called production theory, and it is closely related to the consumption (or consumer) theory of economics. The production process and output directly result from productively utilising the original inputs (or factors of production).

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Trade Liberalization, Firm Heterogeneity, and Labor Layoffs: An Empirical Investigation

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