Technology Adoption, Export Status, and Skill Upgrading: Theory and Evidence

Abstract

This paper develops a model of trade that features heterogeneous firms, technology choice and different types of skilled labor in a general equilibrium framework to explain within-industry increase in the relative demand for skilled workers. Its main contribution is to investigate the impact of firms' export and technology choice decisions on skill upgrading. Only firms in the upper range of the productivity distribution produce for the foreign market using high-technology. Since this technology is skilled-biased, exporters that resort to modern technologies are more skill intensive. Empirical evidence is also provided to support the model's main predictions using plant-level panel data from Chile's manufacturing sector (1990)(1991)(1992)(1993)(1994)(1995)(1996)(1997)(1998)(1999)). 1 1 1 , where qi is the demand for a 320 Maria Bas

Skill‐biased heterogeneous firms, trade liberalization and the skill premium

“…The same is true of the model byBas (2012), though her model takes the skill premium as fixed. 4 We refer here to the author's discussion in the first paragraph of section 4.2.2 of Bustos (2011).…”

Skilled-Labor Intensity Differences Across Firms, Endogenous Product Quality, and Wage Inequality

“…16 Recent empirical studies of international trade support the view that firm's skill intensity increases revenue through their production of higher-quality products: (i) a more skill intensive firm is more likely to be an exporter (e.g., Schank et al 2007;Bas 2012), (ii) exporters pay higher wages because the labor force employed by exporting firms are relatively biased toward skilled labor (see, e.g., Irarrazabal et al 2009), and (iii) a positive association between firm's skill intensity and product quality, and more successful firms set higher prices, which implies "quality competition" (e.g., Verhoogen 2008; Kyoji and Keiko 2010;Bastos and Silva 2010;Baldwin and Harrigan 2011;Kugler and Verhoogen 2012). Hence, as suggested in a number of empirical findings, I assume that α > φln( s w ) holds, so that a firm's revenue increases with firm-specific skilled-labor intensity θ and its resulting product quality.…”

Intra‐industry trade and the demand for child labor

“…Since the upgraded technology is biased toward skilled workers and only the most productive firms find it profitable to upgrade, Bas finds that trade can exacerbate inequality by increasing the skill premium as average productivity increases. The production function for firms employed in this paper is similar to that in Bas (), with the caveat that we allow a firm's productivity parameter to affect adult and child labor differently. This allows us to compare how trade liberalization affects the demand for child labor in different types of sectors.…”

“…He finds that since trade increases the number of varieties available to produce final goods, this variety-skill complementarity increases the skill premium and increases inequality. More recently, Bas (2012) examined how the wages of low and high skilled workers are affected by the choices made by firms to upgrade their technology using Melitz's framework. Since the upgraded technology is biased toward skilled workers and only the most productive firms find it profitable to 2 Baland and Robinson (2000) note the need to consider firm heterogeneity before concluding that a ban on child labor will always lead to a Pareto improvement.…”

“…This allows us to compare how trade liberalization affects the demand for child labor in different types of sectors. More importantly, unlike Kurokawa (2011) and Bas (2012), this paper does not address the inequality between factors (since the relative wage is assumed to be exogenous) but looks at the absolute level of child labor demanded by firms and how it is affected by trade liberalization/sanctions dependent on the productivity elasticity between adult and child workers. The model in this paper also explores the risk aspect of employing child labor which has been largely ignored in the current literature.…”