Diversity and trade

Gene M. Grossman, Giovanni Maggi

Research output: Contribution to journalArticlepeer-review

126 Scopus citations

Abstract

We develop a competitive model of trade between countries with similar aggregate factor endowments. The trade pattern reflects differences in the distribution of talent across the labor forces of the two countries. The country with a relatively homogeneous population exports the good produced by a technology with complementarities between tasks. The country with a more diverse workforce exports the good for which individual success is more important. Imperfect observability of talent strengthens the forces of comparative advantage. Finally, we examine the effects of trade on income distribution and the composition affirms in each industry.

Original languageEnglish (US)
Pages (from-to)1255-1275
Number of pages21
JournalAmerican Economic Review
Volume90
Issue number5
DOIs
StatePublished - Dec 2000
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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