Showing papers by "Peter K. Schott published in 2005"
TL;DR: In this article, the authors explore a newly developed dataset that links U.S. international trade transactions to longitudinal data on US enterprises and find that firms that trade goods play an important role in the United States, employing more than a third of the workforce.
Abstract: This paper provides an integrated view of globally engaged U.S. firms by exploring a newly developed dataset that links U.S. international trade transactions to longitudinal data on U.S. enterprises. These data permit examination of a number of new dimensions of firm activity, including how many products firms trade, how many countries firms trade with, the characteristics of those countries, the concentration of trade across firms, whether firms transact at arms length or with related parties, and whether firms import as well as export. Firms that trade goods play an important role in the U.S., employing more than a third of the U.S. workforce. We find that the most globally engaged U.S. firms, i.e. those that both export to and import from related parties, dominate U.S. trade flows and employment at trading firms. We also find that firms that begin trading between 1993 and 2000 experience especially rapid employment growth and are a major force in overall job creation.
542 citations
TL;DR: The authors examines how country, industry and firm characteristics interact in general equilibrium to determine nations' responses to trade liberalization, showing that the relative ascendance of high-productivity firms within industries boosts aggregate productivity and drives down consumer prices.
Abstract: This paper examines how country, industry and firm characteristics interact in general equilibrium to determine nations' responses to trade liberalization. When firms possess heterogeneous productivity, countries differ in relative factor abundance and industries vary in factor intensity, falling trade costs induce reallocations of resources both within and across industries and countries. These reallocations generate substantial job turnover in all sectors, spur relatively more creative destruction in comparative advantage industries than comparative disadvantage industries, and magnify ex ante comparative advantage to create additional welfare gains from trade. The relative ascendance of high-productivity firms within industries boosts aggregate productivity and drives down consumer prices. In contrast with the neoclassical model, these price declines dampen and can even reverse the real wage losses of scarce factors as countries liberalize.
119 citations
Posted Content•
TL;DR: This article developed a theoretical model of heterogeneous firms endogenously self-selecting into heterogeneous products and characterized the bias introduced by unobserved variation in product mix across firms, and the implications of this bias for identifying firm and industry responses to exogenous policy shocks such as deregulation.
Abstract: Firms' decisions about which goods to produce are often made at a more disaggregate level than the data observed by empirical researchers When products differ according to production technique or the way in which they enter demand, this data aggregation problem introduces a bias into standard measures of firm productivity We develop a theoretical model of heterogeneous firms endogenously self-selecting into heterogeneous products We characterize the bias introduced by unobserved variation in product mix across firms, and the implications of this bias for identifying firm and industry responses to exogenous policy shocks such as deregulation More generally, we demonstrate that product switching gives rise to a richer set of industry-level dynamics than models where firm product mix remains fixed
69 citations
Posted Content•
TL;DR: In this article, the authors explore a newly developed dataset that links U.S. international trade transactions to longitudinal data on US enterprises and find that firms that trade goods play an important role in the United States, employing more than a third of the workforce.
Abstract: This paper provides an integrated view of globally engaged U.S. firms by exploring a newly developed dataset that links U.S. international trade transactions to longitudinal data on U.S. enterprises. These data permit examination of a number of new dimensions of firm activity, including how many products firms trade, how many countries firms trade with, the characteristics of those countries, the concentration of trade across firms, whether firms transact at arms length or with related parties, and whether firms import as well as export. Firms that trade goods play an important role in the U.S., employing more than a third of the U.S. workforce. We find that the most globally engaged U.S. firms, i.e. those that both export to and import from related parties, dominate U.S. trade flows and employment at trading firms. We also find that firms that begin trading between 1993 and 2000 experience especially rapid employment growth and are a major force in overall job creation.
37 citations
Posted Content•
TL;DR: The authors developed a methodology for identifying departures from relative factor price equality across regions that is valid under general assumptions about production, markets and factors, and applied this methodology to the United States to reveal substantial and increasing deviations in relative skilled wages across labour markets in both 1972 and 1992.
Abstract: We develop a methodology for identifying departures from relative factor price equality across regions that is valid under general assumptions about production, markets and factors. Application of this methodology to the United States reveals substantial and increasing deviations in relative skilled wages across labour markets in both 1972 and 1992. These deviations vary systematically with labour markets’ industry structure both in cross section and over time.
33 citations
TL;DR: In this paper, the authors explore a newly developed dataset that links U.S. international trade transactions to longitudinal data on U. S. enterprises, and find that firms that trade goods play an important role in the US economy, employing more than a third of the workforce, i.e., those that both export to and import from related parties.
Abstract: This paper provides an integrated view of globally engaged U.S. …rms by exploring a newly developed dataset that links U.S. international trade transactions to longitudinal data on U.S. enterprises. These data permit examination of a number of new dimensions of …rm activity, including how many products …rms trade, how many countries …rms trade with, the characteristics of those countries, the concentration of trade across …rms, whether …rms transact at arms length or with related parties, and whether …rms import as well as export. Firms that trade goods play an important role in the U.S., employing more than a third of the U.S. workforce. We …nd that the most globally engaged U.S. …rms, i.e. those that both export to and import from related parties, dominate U.S. trade ‡ows and employment at trading …rms. We also …nd that …rms that begin trading between 1993 and 2000 experience especially rapid employment growth and are a major force in overall job creation.
27 citations
01 Jan 2005
TL;DR: In this article, the authors investigate the boundaries of the firm by analyzing product choice and find that product switching by U.S. manufacturing firms is an important margin of adjustment that yields insight into demand and supply complementarities, challenges standard assumptions about how firms diversify, and accounts for a substantial portion of aggregate manufacturing growth.
Abstract: We take an alternate approach to investigating the boundaries of the firm by analyzing product choice. We examine the number and types of products that firms co-produce, how patterns of coproduction evolve over time, and the implications of these patterns for microand macroeconomic outcomes. Empirically, we find that product-switching by U.S. manufacturing firms is an important margin of adjustment that yields insight into demand and supply complementarities, challenges standard assumptions about how firms diversify, and accounts for a substantial portion of aggregate manufacturing growth. These results motivate our development of a dynamic theory of the firm that models a firm’s incentives to alter its product mix as a function of evolving firm, product and industry characteristics, as well as the interactions of these characteristics over time.
17 citations
TL;DR: This article developed a theoretical model of heterogeneous firms endogenously self-selecting into heterogeneous products and characterized the bias introduced by unobserved variation in product mix across firms, and the implications of this bias for identifying firm and industry responses to exogenous policy shocks such as deregulation.
Abstract: Firms' decisions about which goods to produce are often made at a more disaggregate level than the data observed by empirical researchers. When products differ according to production technique or the way in which they enter demand, this data aggregation problem introduces a bias into standard measures of firm productivity. We develop a theoretical model of heterogeneous firms endogenously self-selecting into heterogeneous products. We characterize the bias introduced by unobserved variation in product mix across firms, and the implications of this bias for identifying firm and industry responses to exogenous policy shocks such as deregulation. More generally, we demonstrate that product switching gives rise to a richer set of industry-level dynamics than models where firm product mix remains fixed.
14 citations
TL;DR: This paper showed that the lens condition is more likely to be satisfied when goods are relatively disaggregate compared to regions, and that the true number of either goods or regions is unknown.
Abstract: Deardorff [Journal of International Economics 36 (1994) 167-175] offers an intuitively appealing test for factor price equality (FPE) He demonstrates that FPE is impossible if the set (ie, lens) of points defined by regional factor abundance vectors does not lie within the set of points defined by goods' input intensities This note demonstrates that empirical implementation of the lens condition is problematic if the "true" number of either goods or regions is unknown We show that satisfaction of the lens condition is more likely when goods are relatively disaggregate compared to regions
5 citations
01 Jan 2005
TL;DR: In this article, the authors developed a methodology for decomposing cross-country variation in export unit values into quality versus real price components, and derived conditions under which the unobserved export quality ratio of any two exporters is bounded by the observed Paasche and Laspeyres price indexes defined over their common exports to a third country.
Abstract: This paper develops a methodology for decomposing cross-country variation in export unit values into quality versus real price components. The methodology is based on revealed preferences in an environment where consumers have a taste for variety. We derive conditions under which the unobserved export quality ratio of any two exporters is bounded by the observed Paasche and Laspeyres price indexes defined over their common exports to a third country. We then show that price variation not associated with variation in export product quality can be identified using information on countries’ trade balance, and introduce a technique for adjusting the bounds to incorporate this information. Finally, we use our methodology to estimate the evolution of U.S. trading parter export quality from 1974 to 2001.
4 citations
Posted Content•
TL;DR: This article showed that the lens condition is more likely to be satisfied when goods are relatively disaggregate compared to regions, and that the true number of either goods or regions is unknown.
Abstract: Deardorff [Journal of International Economics 36 (1994) 167-175] offers an intuitively appealing test for factor price equality (FPE). He demonstrates that FPE is impossible if the set (i.e., lens) of points defined by regional factor abundance vectors does not lie within the set of points defined by goods' input intensities. This note demonstrates that empirical implementation of the lens condition is problematic if the "true" number of either goods or regions is unknown. We show that satisfaction of the lens condition is more likely when goods are relatively disaggregate compared to regions.
01 Jan 2005
TL;DR: This paper developed a methodology for identifying departures from relative factor price equality across regions that is valid under general assumptions about production, markets and factors, and applied this methodology to the United States to reveal substantial and increasing deviations in relative skilled wages across labor markets in both 1972 and 1992.
Abstract: We develop a methodology for identifying departures from relative factor price equality across regions that is valid under general assumptions about production, markets and factors. Application of this methodology to the United States reveals substantial and increasing deviations in relative skilled wages across labor markets in both 1972 and 1992. These deviations vary systematically with labor markets industry structure both in cross section and over time.