Skip to content

Trade Development and Political Economy Presents: Ariell Reshef

341 Eggers Hall

Add to: Outlook, ICal, Google Calendar

Trade Development and Political Economy Presents: Skill Biased Heterogeneous Firms, Trade Liberalization, and the Skill Premium by Ariell Reshef

Authors: Ariell Reshef and James Harrigan
Speaker: Ariell Reshef

Abstract: The authors propose a theory that rising globalization and rising wage inequality are related because trade liberalization raises the demand facing highly competitive skill-intensive firms. In their model, only the lowest-cost firms participate in the global economy exactly along the lines of Melitz (2003). In addition to differing in their productivity, firms differ in their skill intensity. The authors model skill-biased technology as a correlation between skill intensity and technological acumen, and they estimate this correlation to be large using firm-level data from Chile in 1995. A fall in trade costs leads to both greater trade volumes and an increase in the relative demand for skill, as the lowest-cost/most-skilled firms expand to serve the export market while less skill-intensive non-exporters retrench in the face of increased import competition. This mechanism works regardless of factor endowment differences, so the authors provide an explanation for why globalization and wage inequality move together in both skill-abundant and skill-scarce countries. In their model countries are net exporters of the services of their abundant factor, but there are no Stolper-Samuelson effects because import competition affects all domestic firms equally.

Short Bio: Ariell Reshef is Assistant Professor of Economics at the University of Virginia. His research interests are in international trade and development economics. His work has been published in top economics journals like the Quarterly Journal of Economics and the Review of Economics and Statistics.

Open to

Public

Contact

Accessibility

Contact to request accommodations

Exterior of Maxwell in black and white when there was no Eggers building

We’re Turning 100!


To mark our centennial in the fall of 2024, the Maxwell School will hold special events and engagement opportunities to celebrate the many ways—across disciplines and borders—our community ever strives to, as the Oath says, “transmit this city not only not less, but greater, better and more beautiful than it was transmitted to us.”

Throughout the year leading up to the centennial, engagement opportunities will be held for our diverse, highly accomplished community that now boasts more than 38,500 alumni across the globe.