This paper presents a trade model with capital and labor as factors of production. The main contribution of this paper is that it considers a new type of firm heterogeneity, which is empirically relevant: firms in this paper differ with respect to their factor shares in production. Therefore,...

Empirical evidence suggests that sectoral export growth decreases exporters’ survival probability, whereas non-exporters are unaffected. Models with firm heterogeneity in total factor productivity predict the opposite. To solve this puzzle, we develop a two-factor framework where firms differ...

We embed a competitive search model with labor market discrimination into a two-sector, two-country framework in order to analyze how labor market discrimination impacts the pattern of international trade and also how trade affects discrimination. Discrimination reduces the matching probability...