Sorting it Out: International Trade and Protection with Heterogeneous Workers

49 Pages Posted: 19 Dec 2004 Last revised: 14 Aug 2009

See all articles by Franziska Ohnsorge

Franziska Ohnsorge

International Monetary Fund (IMF)

Daniel Trefler

University of Toronto - Rotman School of Management; National Bureau of Economic Research (NBER)

Date Written: December 2004

Abstract

The two models of international trade with developed factor markets -- Heckscher-Ohlin and Specific Factors -- both suffer significant defects. For example, their predictions about the patterns of domestic production and international trade are for the most part either indeterminate or uselessly complex. The problem with these models is that the supply of factors to an industry is either perfectly elastic or perfectly inelastic. Using a model in which heterogeneous workers sort across industries we eliminate this problem. The result is a multi-good model with sharp predictions about (1) the domestic pattern of production, (2) North-North and North-South trade, (3) the demand for protection, (4) the determinants of domestic income distribution, and (5) the effect of trade on economic development.

Suggested Citation

Ohnsorge, Franziska and Trefler, Daniel, Sorting it Out: International Trade and Protection with Heterogeneous Workers (December 2004). NBER Working Paper No. w10959. Available at SSRN: https://ssrn.com/abstract=629601

Franziska Ohnsorge

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Daniel Trefler (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-978-4190 (Phone)
416-978-6713 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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