We provide evidence indicating that countries with well-developed social security systems do not necessarily face a trade-off between social spending and competitiveness. On average, countries that spend a lot on social needs score well in the competitiveness league. We investigate the...

In recent years wages in China have been rising and the yuan has appreciated, potentially eroding China's cost advantage in manufactures. This paper explores the evolution of China's relative unit labor costs in manufacturing over 1998-2009. Between 1998 and 2003 China's unit labor costs fell,...

With the availability of international value added trade data it has become evident that gross export data and value added data do not provide the same information. Although gross exports crosses national borders and is the target of trade policy, value added data tell us what fragment in the...

As a part of their industry or competition policies governments decide whether to allow for free market entry of firms or to regulate market access. We analyze a model where governments (ab)use these policy decisions for strategic reasons in an international setting. Multiple equilibria of this...

This paper proposes a model in which the removal of barriers to trade and factor mobility is associated with endogenous fragmentation of the value-added chain. Fragmentation is the outcome of cost competition - the profit-maximizing choice of cost structure by monopolistically competitive firms....

In recent years, manufacturing firms in the United States have faced increasing import competition from low-wage countries, especially China. Does this competition hurt or help innovation by firms? This paper studies the effect of the surge in imports from China on innovation in the US...

We analyze the effect of the increase in trade exposure induced by the rise of China and the transformation of Eastern Europe on collective bargaining coverage of German plants in the period 1996–2008. We exploit cross-industry variation in trade exposure and use trade flows of other...

This paper shows that import exposure affects voting behavior because it affects local labor markets. We develop a new framework for mediation analysis where one instrumental variable is sufficient to identify three causal effects. Using German data from 1987-2009, we find that import exposure...