We propose a theoretical foundation for a link between North-South trade imbalances and skill upgrading. We provide robust support for our theory using a panel of US manufacturing industries observed between 1977 and 2005. Our results suggest that the impact of the US trade deficit on the...

We study, both theoretically and empirically, how trade imbalances affect the structure of countries' exports and wage inequality. We show that, in a Heckscher-Ohlin model with a continuum of goods, a Southern (Northern) trade surplus leads to an increase (reduction) in the average skill...

We argue that the large and growing North-South trade imbalances arisen over the last three decades may have exacerbated wage inequality worldwide. In particular, we show that in a standard Heckscher-Ohlin setup with a continuum of goods, a Southern trade surplus is associated with higher skill...

We study how firm and foreign market characteristics affect the geographic distribution of exporterssales. To this purpose, we use export intensities (the ratio of exports to sales) across destinations as our key measures of firmsrelative involvement in heterogeneous foreign markets. In a...

Markups vary widely across industries and countries, their heterogeneity has increased overtime and asymmetric exposure to international trade seems partly responsible for this phenomenon. In this paper, we study how the entire distribution of markups affects resource misallocation and welfare...

The main feature of the italian trade pattern is the polarization of revealed comparative advantage in the traditional labor intensive sectors. This seems at odds with the fact that Italy is a high-income industrial country. In this paper, we argue that this peculiar trade structure can be...

This paper investigates the relationship between trade openness and the size of governments, both theoretically and empirically. We argue that openness can increase the size of governments through two channels: (1) a terms of trade externality, whereby trade lowers the domestic cost of taxation,...