We construct a model of international trade and multinational production (MP) to examine the impact of globalization on the skill premium in skill-abundant and skill-scarce countries. The key mechanisms in our framework arise from the interaction between three elements: cross-country differences...

Capital equipment - such as computers and industrial machinery - embodies skill-biased technology, in the sense that it is complementary to skilled labor. Most countries import a large share of their capital equipment, and by doing so import skill-biased technology. In this paper we develop a...

A salient feature of globalization in recent decades is the emergence of "global supply chains" in which different countries specialize in different stages of a sequential production process. In Arnaud Costinot, Jonathan Vogel and Su Wang (2011), CVW hereafter, we have developed a simple theory...

The theory of comparative advantage is at the core of neoclassical trade theory. Yet we know little about its implications for how nations should conduct their trade policy. For example, should import sectors with weaker comparative advantage be protected more? Conversely, should export sectors...

In this paper we present and solve a three-stage game of entry, location, and pricing in a spatial price discrimination framework with arbitrarily many heterogeneous firms. We provide a unique characterization of all equilibria without imposing restrictions on the distribution of marginal costs

This paper develops an elementary theory of global supply chains. We consider a world economy with an arbitrary number of countries, one factor of production, a continuum of intermediate goods, and one final good. Production of the final good is sequential and subject to mistakes. In the unique...

How do trade liberalizations affect relative factor prices and to what extent do they cause factors to reallocate across sectors? We first present a general framework that nests a wide range of models that have been used to study the link between globalization and factor prices. Under some...

We perform a quantitative analysis of observed changes in U.S. between-group inequality between 1984 and 2003. We use an assignment framework with many labor groups, equipment types, and occupations in which changes in inequality are caused by changes in workforce composition, occupation demand,...

What are the welfare implications of trade shocks? We provide a sufficient statistic that measures changes in welfare, to a first-order approximation, taking into account adjustment in labor supply, in frictional unemployment, and in the sectors to which workers apply while allowing for...

This paper develops tools and techniques to study the impact of exogenous changes in factor supply and factor demand on factor allocation and factor prices in economies with a large number of goods and factors. The main results of our paper characterize sufficient conditions for robust monotone...