Essays on international trade and intergenerational human capital transmission

First chapter aims to quantify the role of trade in capital goods incross country income differences. I construct a multi-country general equilibriummodel of trade along the line of Eaton and Kortum (2002) and Alvarezand Lucas (2007) and introduce trade in capital goods and capital accumulation.In this framework, comparative advantage and the costs of internationaltrade determine the pattern of production, specialization, and trade. I calibratethe model for 53 countries by estimating trade barriers and calibratingproductivity parameters to match the bilateral trade data in 1996. The modelis used to analyze full trade liberalizations. I find that removing barriers oninvestment goods accounts a large portion of reducing cross-country incomedifferences and welfare gain. Counterfactual exercises suggest that developingcountries gain relatively more than developed countries.In the second chapter, I focus on the impact of free trade on exportimportratios in two different sectors. I employ a multi-country general equilibrium model of bilateral trade patterns along the line of Eaton and Kortum(2002) and Alvarez and Lucas (2007). I calibrate the model for 20 countriesby estimating trade barriers and calibrating productivity parameters to matchthe bilateral trade data in 1996. The model is used to analyze full trade liberalizations.The impacts of free trade are predicted to be an increase in theexport-import ratios in the comparative advantage sector and a decline in thecomparative disadvantage sector, on average. In developing countries the averagepercentage change in export-import ratios exceeds the average percentagechange in export-import ratios in developed countries.Finally, in the third chapter, I focus on the intergenerational humancapital transmission. I develop and calibrate a theoretical model that considersthree mechanisms of intergenerational transmission of human capital:(i) persistence in learning ability; (ii) parental investment in child’s humancapital; (iii) higher teaching productivity of parents with more human capital.Within this framework, I find that (i) and (ii) plays important roles while (iii)does not. In addition the model generates the documented fact that higherwageparents spending more time teaching their children in spite of the higheropportunity cost. I asses the role of nature and nurture effects in intergenerationalpersistence of earnings and I find that nature accounts a large portionof the intergenerational persistence in earnings. I also quantify the relativeimportance of these mechanisms on wage inequality.