Trade and Productivity

Posted: 18 Oct 2002

See all articles by Francisco Alcalá

Francisco Alcalá

Universidad de Murcia. Facultad de Economia y Empresa

Antonio Ciccone

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

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Abstract

We estimate the effect of international trade on average labor productivity across countries. Our empirical approach relies on a summary measure of trade that, we argue, is preferable to the one conventionally used on both theoretical and empirical grounds. In contrast to the marginally significant and non-robust effects of trade on productivity found previously, our estimates are highly significant and robust even when we include institutional quality and geographic factors in the empirical analysis. We also examine the channels through which trade and institutional quality affect average labor productivity. Our finding is that trade works through labor efficiency, while institutional quality works through physical and human capital accumulation. We conclude with an exploratory analysis of the role of trade policies for average labor productivity.

Suggested Citation

Alcalá, Francisco and Ciccone, Antonio, Trade and Productivity. Available at SSRN: https://ssrn.com/abstract=311515

Francisco Alcalá (Contact Author)

Universidad de Murcia. Facultad de Economia y Empresa ( email )

Campus de Espinardo
Espinardo, Murcia 30100
Spain
34-868883767 (Phone)
34-868883758 (Fax)

Antonio Ciccone

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
+34 93 542 1669 (Phone)
+34 93 542 1746 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

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