Trade Costs, Quality, and The Skill Premium

We develop a monopolistic competition model with nonhomothetic factor input bundles where increasing quality requires increasing use of skilled workers. As a result more skill abundant countries export higher quality, higher priced goods. Using a multicountry dataset we test and confirm the findings in Schott (2004) of a positive effect of skill abundance on unit values identified with US data. We extend the core model with per unit trade costs leading to the Washington-apples effect that goods shipped over larger distance are of higher quality. The combination of high-quality goods being relatively skill intensive with the Washington-apples effect implies that countries at a larger distance from their trading partners display a higher skill premium. Simulating our model we find that a doubling of distance of a country relative to all its trading partners raises the skill premium in a country by about 2.3 percent.

Calibrating a CGE model with NTBs that Incorporates Standard Models of Modern Trade Theory

We propose a way to incorporate NTBs for the four workhorse models of the modern trade literature in computable general equilibrium models (CGEs). CGE models feature intermediate linkages and thus allow us to study global value chains (GVCs). We show that the Ethier-Krugman monopolistic competition model, the Melitz firm heterogeneity model and the Eaton and Kortum model can be defined as an Armington model with generalized marginal costs, generalized trade costs and a demand externality. As already known in the literature in both the Ethier-Krugman model and the Melitz model generalized marginal costs are a function of the amount of factor input bundles. In the Melitz model generalized marginal costs are also a function of the price of the factor input bundles. Lower factor prices raise the number of firms that can enter the market profitably (extensive margin), reducing generalized marginal costs of a representative firm. For the same reason the Melitz model features a demand externality: in a larger market more firms can enter. We implement the different models in a CGE setting with multiple sectors, intermediate linkages, non-homothetic preferences and detailed data on trade costs. We find the largest welfare effects from trade cost reductions in the Melitz model. We also employ the Melitz model to mimic changes in Non tariff Barriers (NTBs) with a fixed cost-character by analysing the effect of changes in fixed trade costs. While we work here with a model calibrated to the GTAP database, the methods developed can also be applied to CGE models based on the WIOD database.

David Wolffsohn

Jacobus Henricus Kann

Catalogus librorum manuscriptorum qui in Bibliotheca Senatoria Civitatis Lipsiensis asservantur : codices orientalium linguarum ; accedunt tabulae lithographicae XV

ed. Aemilius Guilelmus Robertus Naumann. Descripserunt Henricus Orthobius Fleischer ... et Franciscus Delitzsch ...

Ms. Barth. 30 - Distinctiones in librum I Decretalium

Vorbesitzer: Bartholomaeusstift Frankfurt am Main;

Ms. Praed. 21 - Compendium Summae theologiae Thomae de Aquino

Vorbesitzer: Dominikanerkloster Frankfurt am Main

Ms. Praed. 127 - Summa super V libros Decretalium

Vorbesitzer: Dominikanerkloster Frankfurt am Main

Abildung deren höchst schädlichē unbekandten See-Würmer : welche aus West-Indien Zuerst nach Ost-Friesland, in den Texel, und Amsterdam gekom̄en, und alldorten unbeschreiblichē Schaden verursachet

Bibliogr. Nachweis: Faust: Zoolog. Einblattdrucke .̤ I,18

Execution der An̄a Maria Karpffin : ihres Alters 28 Jahr, v. Unterdencken gebürtig, welche Zu Dahlhoffen ein Kind jämerl. ermordet und noch ein anders WochenKind gestohlen ...

Thomas Bäck sc. exc.

Giosep. Ferd. Miller presentando la persona d'Arlequino

Elias Bäck à H. delin. et ... ; [Stecherzeichen] IGS

Hundert-Jähriges angedencken, das schnelle Kriegsglück des Schwedischen Heldens u. Königs Gustavi Adolphi in Eroberung aller dieser allhier beygefügter u. in Kupffer gestochnen Städte u. Plätze ... : welche sich Ao. 1630 u. 1631 alle theils durch Accord theils durch Sturm seinem siegenden Schwerde ergeben müßen

Mit 103 Stadtansichten im Miniaturformat

Fortsetzung derer Siege und Eroberungen des Schwedis. Heldens Gustavi Adolphi : wie solcher von Anno 1631, biß An̄o 1632 beygefügte in Kupffer gestochne Städte und Plätze ... überfallen und erobert ...

E. B. a. H. fecit et exc.