Trade , wages , and productivity

@inproceedings{Behrens2008TradeW,
  title={Trade , wages , and productivity},
  author={Kristian Behrens and Giordano Mion and Yasusada Murata and Jens S{\"u}dekum},
  year={2008}
}
We develop a new general equilibrium model of trade in which wages, productivity, and markups are endogenous and need not be equalized across asymmetric regions. Using CanadaUS regional data, we structurally estimate a gravity equation for bilateral trade subject to general equilibrium conditions. The estimated model is then used to simulate the impacts of removing all trade barriers generated by the Canada-US border. The counterfactual analysis reveals that ignoring endogenous wage and… CONTINUE READING
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