Working Paper: NBER ID: w28720
Authors: George A. Alessandria; Robert C. Johnson; Keimu Yi
Abstract: This paper surveys macroeconomic and microeconomic perspectives on the role of international trade in structural transformation. We start by describing canonical frameworks that have been used to quantify how trade influences sectoral shares of employment and value added. We then pivot to survey micro-empirical evidence on the impact of changes in trade on the allocation of labor across sectors and productivity at the firm level. In this, we put special emphasis on the role of participation in global value chains and inward foreign direct investment in mediating these effects. Next, we evaluate evidence on the barriers to trade faced by low-income countries, with special attention to recent work that measures these costs taking firm dynamics into account. We conclude by discussing how these micro-perspectives can be integrated into macro-models to advance our understanding of structural change.
Keywords: No keywords provided
JEL Codes: F1; F43; O11; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lower trade barriers (F19) | sectoral composition of employment (J21) |
| lower trade barriers (F19) | sectoral composition of value added (L16) |
| trade shocks (F14) | reallocation of factors across sectors (F16) |
| reallocation of factors across sectors (F16) | productivity patterns (J29) |
| reallocation of factors across sectors (F16) | employment patterns (J68) |
| trade participation (F10) | firm-level productivity (D22) |