Empirical evidence suggests that sectoral export growth decreases exporters' survival probability, whereas this is not true for non-exporters. Models with firm heterogeneity in total factor productivity (TFP) predict the opposite. To solve this puzzle, we develop a two{factor framework where firms differ in factor intensities. Thus, export growth increases competition for the factor used intensively by exporters, eliminating some of them, while non-exporters benefit. Interacting heterogeneity in factor shares with heterogeneity in TFP we show that factor market competition reduces the growth in average TFP brought about by trade liberalization...

firm dynamics, firm heterogeneity in factor input ratios, two-factor trade models
Models of Trade with Imperfect Competition and Scale Economies (jel F12), Country and Industry Studies of Trade (jel F14), Trade and Labor Market Interactions (jel F16), Production, Pricing, and Market Structure; Size Distribution of Firms (jel L11)
Tinbergen Institute
Tinbergen Institute Discussion Paper Series
Discussion paper / Tinbergen Institute
Tinbergen Institute

Emami Namini, J, Facchini, G, & Lopez, R.A. (2011). Export Growth and Factor Market Competition: Theory and Some Evidence (No. TI 2011-013/2). Discussion paper / Tinbergen Institute. Tinbergen Institute. Retrieved from http://hdl.handle.net/1765/22338