Trade Costs and Job Flows: Evidence from Establishment-Level Data

47 Pages Posted: 23 Jul 2014

See all articles by José Luis Groizard

José Luis Groizard

University of the Balearic Islands

Priya Ranjan

University of California, Irvine - Department of Economics

Antonio Rodriguez-Lopez

University of California, Irvine

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Date Written: July 22, 2014

Abstract

Changes in the costs of trading inputs or final goods affect establishment-level job flows. Using a longitudinal database containing the universe of manufacturing establishments in California from 1992 to 2004, we find that a decline in input or final-good trade costs is associated with job destruction in the least productive establishments, job creation in the most productive establishments, and an increase in the death likelihood of the least productive establishments. The evidence is consistent with predictions of models of trade with heterogeneous firms. Additionally, the evidence shows that the effects of input trade costs on establishment-level job flows are larger than the effects of final-good trade costs.

Keywords: heterogeneous firms, job flows, trade costs

JEL Classification: F14, F16

Suggested Citation

Groizard, Jose Luis and Ranjan, Priya and Rodriguez-Lopez, Antonio, Trade Costs and Job Flows: Evidence from Establishment-Level Data (July 22, 2014). CESifo Working Paper Series No. 4876. Available at SSRN: https://ssrn.com/abstract=2469722

Jose Luis Groizard

University of the Balearic Islands ( email )

Department of Economics
Ctra. de Valldemossa km 7.5
Palma de Mallorca, Balears 07122
Spain
+34-971 172 784 (Phone)
+ 34-971 172 389 (Fax)

HOME PAGE: http://www.uib.es/depart/deaweb/personal/profesores/personalpages/jlgroizard/index_eng.htm

Priya Ranjan (Contact Author)

University of California, Irvine - Department of Economics ( email )

3151 Social Science Plaza
Irvine, CA 92697-5100
United States

Antonio Rodriguez-Lopez

University of California, Irvine ( email )

Campus Drive
Irvine, CA 62697-3125
United States

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