We explore how the competitive pressure of imports affects productivity, at the firm level. There are two conflicting effects of import-competition: the pro-competitive effect fosters productivity, while the direct effect hinders it. The pro-competitive effect dominates in the steady-state,...

Capturing the notion of kaleidoscopic comparative advantage (Bhagwati, 1998), we show that international trade increases the volatility of profitability. In this framework, we address the labor market implications of an increase in openness, when insurance and credit markets are imperfect. With...