This paper develops a trade model with firm-specific quality heterogeneity, limit pric-ing, and an endogenous distribution of markups. Exposure to trade induces only thefirms producing high-quality (high-price) products to enter the export markets, whereasfirms producing low-quality (low-price)...

This paper develops a monopolistic competition model with heterogeneous firms tostudy the interaction between technology adoption and trade in a world of two countriesfacing different technology adoption costs. It shows that a reduction in the technologyadoption cost in one country increases the...

The empirical relationship between trade protection and economic growth is surprisinglyfragile, as shown in a number of other papers. After demonstrating this empiricalsensitivity, we address one possible explanation for these findings: that the relationshipis nonlinear. Following the endogenous...

Strong procyclical fluctuations in the durable production are the most prominent featureof the empirical response to monetary shocks. This paper investigates the role of preferencesin matching this feature of the data in a two-sector sticky price model with flexibly priceddurables. The reaction...

This paper analyzes the impact of IRCA 1986, a U.S. amnesty, on immigrants’human capital development and labor market outcomes. Because of IRCA, the 1975-1981 arrivals were all legalized by 1990. However, many of the 1982-1986 arrivalsremained illegal. Using the California Latino immigrants in...

We examine in controlled experiments how individuals make choices when faced withmultiple options. The choice tasks mimic the selection of health insurance, prescriptiondrug, or retirement savings plans. However, in our experiment, the available options canbe objectively ranked. We ¯nd that the...

We extend the model of friendship networks developed by Brueck-ner (2006) in two ways. First, we extend the level of indirect bene…tsby incorporating bene…ts from up to three links and explore its impli-cation for the socially optimal and individual e¤ort levels. Next, wegeneralize the...

We study the. Incentive effects of endogenous group formation in a voluntary contributon experiment. Subjects are given information on the past contributions of others and allowed to express a preference for partners. On the basis of the stated preferences new groups are formed. We find that the...