This paper presents a model in which final goods producers outsource intermediate input production. Intermediate inputs are differentiated and their production can be located at home or abroad. The model is used to examine competitive location policy in a (two-country) free trade agreement...

Migrants are among the groups most vulnerable to economic fluctuations. As predicted by the 'welfare magnet' hypothesis, migrants can therefore be expected to--ceteris paribus--prefer countries with more generous welfare provisions to insure themselves against labor market risks. This paper...

In a two-country reciprocal dumping model, with one country unionized, we analyze how wage setting and firm location are influenced by trade liberalization. We show that trade liberalization can induce FDI, which is at odds with conventional theoretical wisdom and cannot happen in a...