Betting on Exports: Trade and Endogenous Heterogeneity

Alessandra Bonfiglioli; Rosario Crino'; Gino Gancia

doi:10.1111/ecoj.12408

Betting on Exports: Trade and Endogenous Heterogeneity

Alessandra Bonfiglioli
, Rosario Crino'
, Gino Gancia

Università Cattolica del Sacro Cuore

Barcelona Graduate School of Economics

Research output: Contribution to journal › Article › peer-review

6 Citations (Scopus)

Abstract

We study the determinants of firm-level heterogeneity in a model where innovation choices uponentry affect the variance of productivity draws. In equilibrium, productivity is Pareto distributed witha shape parameter that depends on industry-level characteristics. We show that export opportunities,by increasing the pay-offs in the tail, induce firms to invest in bigger projects with more dispersedoutcomes. When more productive firms pay higher wages, trade amplifies wage dispersion by makingfirms more unequal. These results are consistent with how firm size, innovation and wageheterogeneity vary in a panel of US industries and states.

Original language	English
Pages (from-to)	612-651
Number of pages	40
Journal	Economic Journal
Volume	128
DOIs	https://doi.org/10.1111/ecoj.12408
Publication status	Published - 2018

Keywords

Firm Heterogeneity
International Trade
Productivity Dispersion
Wage Inequality

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10.1111/ecoj.12408

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title = "Betting on Exports: Trade and Endogenous Heterogeneity",

abstract = "We study the determinants of firm-level heterogeneity in a model where innovation choices uponentry affect the variance of productivity draws. In equilibrium, productivity is Pareto distributed witha shape parameter that depends on industry-level characteristics. We show that export opportunities,by increasing the pay-offs in the tail, induce firms to invest in bigger projects with more dispersedoutcomes. When more productive firms pay higher wages, trade amplifies wage dispersion by makingfirms more unequal. These results are consistent with how firm size, innovation and wageheterogeneity vary in a panel of US industries and states.",

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T1 - Betting on Exports: Trade and Endogenous Heterogeneity

AU - Bonfiglioli, Alessandra

AU - Crino', Rosario

AU - Gancia, Gino

PY - 2018

Y1 - 2018

N2 - We study the determinants of firm-level heterogeneity in a model where innovation choices uponentry affect the variance of productivity draws. In equilibrium, productivity is Pareto distributed witha shape parameter that depends on industry-level characteristics. We show that export opportunities,by increasing the pay-offs in the tail, induce firms to invest in bigger projects with more dispersedoutcomes. When more productive firms pay higher wages, trade amplifies wage dispersion by makingfirms more unequal. These results are consistent with how firm size, innovation and wageheterogeneity vary in a panel of US industries and states.

AB - We study the determinants of firm-level heterogeneity in a model where innovation choices uponentry affect the variance of productivity draws. In equilibrium, productivity is Pareto distributed witha shape parameter that depends on industry-level characteristics. We show that export opportunities,by increasing the pay-offs in the tail, induce firms to invest in bigger projects with more dispersedoutcomes. When more productive firms pay higher wages, trade amplifies wage dispersion by makingfirms more unequal. These results are consistent with how firm size, innovation and wageheterogeneity vary in a panel of US industries and states.

KW - Firm Heterogeneity

KW - International Trade

KW - Productivity Dispersion

KW - Wage Inequality

KW - Firm Heterogeneity

KW - International Trade

KW - Productivity Dispersion

KW - Wage Inequality

UR - http://hdl.handle.net/10807/122642

U2 - 10.1111/ecoj.12408

DO - 10.1111/ecoj.12408

M3 - Article

SN - 0013-0133

VL - 128

SP - 612

EP - 651

JO - Economic Journal

JF - Economic Journal

ER -

Betting on Exports: Trade and Endogenous Heterogeneity

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Keywords

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