Recent theoretical models predict gains from international trade coming from intra-industry reallocations, due to a firm selection effect. In this paper we answer two related questions. First, what is the magnitude of this selection effect, and how does it compare to that of intra-national...

In models with heterogeneous …rms trade integration has a positive impact on aggregate productivity through the selection of the best …rms as import competition drives the least productive ones out of the market. To quantify the impact of …rm selection on productivity, we calibrate and...