In an economy with imperfect labor contracts, differences in the distribution of talent can be an independent source of comparative advantage. I study a world economy with two activities, one in which an individual's contribution to production can be measured accurately and another in which...

In an economy with imperfect labor contracts, differences in the distribution of talent can be an independent source of comparative advantage. I study a world economy with two activities, one in which an individual's contribution to production can be measured accurately and another in which...

This paper uproots David Ricardo's trade theory. When his production possibility curve is concave, there is comparative disadvantage, which should mean loss from trade and hence no trade. Since concave curve is common and realistic, his trade theory is obliterated

Samuelson (1947) stated that a regular equilibrium exhibits the transfer paradox if and only if it is unstable. Gale (1974) and many in the early 1980’s debunked this equivalence by adding extra countries, reaching an anti consensus. We reinterpret Samuelson’s result as identifying the...

We consider trade liberalization in a multilateral trade model, where countries have identical homothetic tastes but may have different constant returns to scale technologies that produce at least two goods from at least two factors. In this model, we derive the world prices after trade...

Migration and trade are often linked through ethnic networks boosting bilateral trade. This study uses migration to quantify the importance of Ricardian technology differences for international trade. The framework provides the first panel estimates connecting country-industry productivity and...

We analyze the empirical violation of the Hillman condition, a necessary and sufficient condition for the correspondence between comparative advantage and pre-trade relative prices. Our comprehensive data set allows us to investigate the Hillman condition for virtually all countries of the...

Given a world consisting of two countries, two commodities, and two consumers, this paper analyzes the potential effects of the current global trend of shifting world productions with regards to consumer goods. When technological improvements occur in a developing country, would terms of trade...

We introduce unemployment and endogenous selection of workers into different skill-classes in a trade model with two sectors and heterogeneous firms. This allows us to study the distributional consequences and the skill-specific unemployment effects of trade liberalization. We show that the...

We introduce unemployment and endogenous selection of workers into different skill-classes in a trade model with two sectors and heterogeneous firms. This allows us to study the distributional consequences and the skill-specific unemployment effects of trade liberalization. We show that the...