Diversity and Trade

Giovanni Maggi and Gene Grossman

American Economic Review, 2000, vol. 90, issue 5, 1255-1275

Abstract: We develop a competitive model of trade between countries with similar aggregate factor endowments. The trade pattern reflects differences in the distribution of talent across the labor forces of the two countries. The country with a relatively homogeneous population exports the good produced by a technology with complementarities between tasks. The country with a more diverse workforce exports the good for which individual success is more important. Imperfect observability of talent strengthens the forces of comparative advantage. Finally, we examine the effects of trade on income distribution and the composition of firms in each industry.

JEL-codes: F11 (search for similar items in EconPapers)
Date: 2000
Note: DOI: 10.1257/aer.90.5.1255
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Citations: View citations in EconPapers (111)

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Related works:
Working Paper: Diversity and Trade (1998)
Working Paper: Diversity and Trade (1998)
Working Paper: Diversity and Trade (1998)
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