The impact of trade liberalization on industrial productivity

Paul S. Segerstrom, Yoichi Sugita

Research output: Contribution to journalArticlepeer-review

9 Citations (Scopus)

Abstract

An empirical finding by Trefler (2004, "The Long and Short of the Canada-U.S. Free Trade Agreement", American Economic Review, 94(4), 870-895) and others that industrial productivity increases more strongly in liberalized industries than in nonliberalized industries has been widely accepted as evidence for the Melitz ("The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity", Econometrica, 71, 1695-1725) model. We show that under fairly standard assumptions a multi-industry version of the Melitz model does not predict this relationship. Instead, it predicts the opposite relationship that industrial productivity increases more strongly in nonliberalized industries than in liberalized industries.

Original languageEnglish
Pages (from-to)1167-1179
Number of pages13
JournalJournal of the European Economic Association
Volume13
Issue number6
DOIs
Publication statusPublished - 2015 Dec 1
Externally publishedYes

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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