The German unification process imposed a significant price-cost squeeze on eastern firms. Important technology differences between the East and the West generated high pressures on the competitive position of eastern manufacturing firms when product and factor markets integration took place. In...

The unemployment path in the United States in the last forty years can be significantly explained by the evolution of excessive real wages. An estimation of the evolution of market-clearing wages is presented and its difference with observed average wages - the wage gap - is shown to track...

Globalization, in its multiple interpretations, is seen by many people as a great possibility of improving living standards in developing countries. Trade and financial integration can encourage competition, technology transfers and specialization according to comparative advantage principles....

In the last two decades tariffs around the globe have fallen significantly. However, less well known are their changes in the sectorial structure of protection rates. Between 1988 and 1998, relative tariffs have increased in capital-intensive sectors, and this shift is specially strong in low...

This paper presents a model that introduces foreign firms' competition in product and factor markets in an otherwise standard tariff liberalization setting. Pressures on factor markets from more advanced foreign firms undermine the competitive position of native enterprises. The final impact on...

International wage differences -driven by international technology or factor endowment differences-encourage the flow of Foreign Direct Investment from high- to low-wage countries. However, the access of high-technology firms may drive domestic wages up, dampening the incentives for FDI flows. A...

The profitability gap between state-owned enterprises and the non-state industrial sector in China is significant. Using a highly-disaggregated database of China’s industry in 2003, we estimate an average return to capital in state-owned enterprises about 9% that of foreign-invested firms, and...

FDI introduces competition between foreign and domestic firms at the factor market level. If the latter are technology backward, cost pressures render them uncompetitive, and absolute advantage determine the pattern of foreign and domestic firms’ production. To compensate for technology...

The one-to-one mapping between cross-country differences in capital returns and the size and direction of international capital flows after financial integration vanishes in a multi-sector world with a laborintensive non-tradable sector if financial liberalization generates significant swings in...

This paper presents a simple methodology to estimate the elasticity of substitution between labor and capital for firms operating in perfectly competitive markets with CRS production functions. It is applied in a cross-country sample to 28 3-digit ISIC manufacturing industries. The econometric...