Trade shocks and factor adjustment frictions: Implications for investment and labor

Autores
Artuç, Erhan; Bet, Carlos Germán; Brambilla, Irene; Porto, Guido
Año de publicación
2013
Idioma
inglés
Tipo de recurso
documento de trabajo
Estado
versión enviada
Descripción
When export opportunities arise, the gains from trade can only be materialized if the economy adjusts. In order to expand and meet new markets, firms must hire new workers and tune their capital stock by investing in product lines, machines and equipment. If this process is costly and imperfect, the economy reacts partially and gradually. We formulate a multi-sector dynamic model featuring capital adjustment costs, firm heterogeneity, and labor mobility costs that we fit to data from Argentina. We estimate the structural capital and labor adjustment cost parameters and using counterfactual simulations we quantify the complementarity between trade shocks and domestic frictions: in the presence of lower costs of factor adjustment there is a sizeable incremental impact of trade shocks on capital, employment, wages, and output. The complementarity is larger for smaller trade shocks, and a large fraction of the capital complementarity is explained by an extensive margin (i.e. firms which do not respond to trade shocks when adjustment costs are high).
Departamento de Economía
Materia
Ciencias Económicas
trade shocks
capital adjustment costs
labor motility
firm heterogeneity
investment
labor market dynamics
inversión
JEL: F6, F16
empleo
Nivel de accesibilidad
acceso abierto
Condiciones de uso
http://creativecommons.org/licenses/by/4.0/
Repositorio
SEDICI (UNLP)
Institución
Universidad Nacional de La Plata
OAI Identificador
oai:sedici.unlp.edu.ar:10915/46229
Acceder
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oai_identifier_str oai:sedici.unlp.edu.ar:10915/46229
network_acronym_str SEDICI
repository_id_str 1329
network_name_str SEDICI (UNLP)
spelling Trade shocks and factor adjustment frictions: Implications for investment and laborArtuç, ErhanBet, Carlos GermánBrambilla, IrenePorto, GuidoCiencias Económicastrade shockscapital adjustment costslabor motilityfirm heterogeneityinvestmentlabor market dynamicsinversiónJEL: F6, F16empleoWhen export opportunities arise, the gains from trade can only be materialized if the economy adjusts. In order to expand and meet new markets, firms must hire new workers and tune their capital stock by investing in product lines, machines and equipment. If this process is costly and imperfect, the economy reacts partially and gradually. We formulate a multi-sector dynamic model featuring capital adjustment costs, firm heterogeneity, and labor mobility costs that we fit to data from Argentina. We estimate the structural capital and labor adjustment cost parameters and using counterfactual simulations we quantify the complementarity between trade shocks and domestic frictions: in the presence of lower costs of factor adjustment there is a sizeable incremental impact of trade shocks on capital, employment, wages, and output. The complementarity is larger for smaller trade shocks, and a large fraction of the capital complementarity is explained by an extensive margin (i.e. firms which do not respond to trade shocks when adjustment costs are high).Departamento de Economía2013-12info:eu-repo/semantics/workingPaperinfo:eu-repo/semantics/submittedVersionDocumento de trabajohttp://purl.org/coar/resource_type/c_8042info:ar-repo/semantics/documentoDeTrabajoapplication/pdfhttp://sedici.unlp.edu.ar/handle/10915/46229enginfo:eu-repo/semantics/altIdentifier/url/http://www.depeco.econo.unlp.edu.ar/doctrab/doc101.pdfinfo:eu-repo/semantics/altIdentifier/issn/1853-3930info:eu-repo/semantics/openAccesshttp://creativecommons.org/licenses/by/4.0/Creative Commons Attribution 4.0 International (CC BY 4.0)reponame:SEDICI (UNLP)instname:Universidad Nacional de La Platainstacron:UNLP2025-09-29T11:02:35Zoai:sedici.unlp.edu.ar:10915/46229Institucionalhttp://sedici.unlp.edu.ar/Universidad públicaNo correspondehttp://sedici.unlp.edu.ar/oai/snrdalira@sedici.unlp.edu.arArgentinaNo correspondeNo correspondeNo correspondeopendoar:13292025-09-29 11:02:35.648SEDICI (UNLP) - Universidad Nacional de La Platafalse
dc.title.none.fl_str_mv Trade shocks and factor adjustment frictions: Implications for investment and labor
title Trade shocks and factor adjustment frictions: Implications for investment and labor
spellingShingle Trade shocks and factor adjustment frictions: Implications for investment and labor
Artuç, Erhan
Ciencias Económicas
trade shocks
capital adjustment costs
labor motility
firm heterogeneity
investment
labor market dynamics
inversión
JEL: F6, F16
empleo
title_short Trade shocks and factor adjustment frictions: Implications for investment and labor
title_full Trade shocks and factor adjustment frictions: Implications for investment and labor
title_fullStr Trade shocks and factor adjustment frictions: Implications for investment and labor
title_full_unstemmed Trade shocks and factor adjustment frictions: Implications for investment and labor
title_sort Trade shocks and factor adjustment frictions: Implications for investment and labor
dc.creator.none.fl_str_mv Artuç, Erhan
Bet, Carlos Germán
Brambilla, Irene
Porto, Guido
author Artuç, Erhan
author_facet Artuç, Erhan
Bet, Carlos Germán
Brambilla, Irene
Porto, Guido
author_role author
author2 Bet, Carlos Germán
Brambilla, Irene
Porto, Guido
author2_role author
author
author
dc.subject.none.fl_str_mv Ciencias Económicas
trade shocks
capital adjustment costs
labor motility
firm heterogeneity
investment
labor market dynamics
inversión
JEL: F6, F16
empleo
topic Ciencias Económicas
trade shocks
capital adjustment costs
labor motility
firm heterogeneity
investment
labor market dynamics
inversión
JEL: F6, F16
empleo
dc.description.none.fl_txt_mv When export opportunities arise, the gains from trade can only be materialized if the economy adjusts. In order to expand and meet new markets, firms must hire new workers and tune their capital stock by investing in product lines, machines and equipment. If this process is costly and imperfect, the economy reacts partially and gradually. We formulate a multi-sector dynamic model featuring capital adjustment costs, firm heterogeneity, and labor mobility costs that we fit to data from Argentina. We estimate the structural capital and labor adjustment cost parameters and using counterfactual simulations we quantify the complementarity between trade shocks and domestic frictions: in the presence of lower costs of factor adjustment there is a sizeable incremental impact of trade shocks on capital, employment, wages, and output. The complementarity is larger for smaller trade shocks, and a large fraction of the capital complementarity is explained by an extensive margin (i.e. firms which do not respond to trade shocks when adjustment costs are high).
Departamento de Economía
description When export opportunities arise, the gains from trade can only be materialized if the economy adjusts. In order to expand and meet new markets, firms must hire new workers and tune their capital stock by investing in product lines, machines and equipment. If this process is costly and imperfect, the economy reacts partially and gradually. We formulate a multi-sector dynamic model featuring capital adjustment costs, firm heterogeneity, and labor mobility costs that we fit to data from Argentina. We estimate the structural capital and labor adjustment cost parameters and using counterfactual simulations we quantify the complementarity between trade shocks and domestic frictions: in the presence of lower costs of factor adjustment there is a sizeable incremental impact of trade shocks on capital, employment, wages, and output. The complementarity is larger for smaller trade shocks, and a large fraction of the capital complementarity is explained by an extensive margin (i.e. firms which do not respond to trade shocks when adjustment costs are high).
publishDate 2013
dc.date.none.fl_str_mv 2013-12
dc.type.none.fl_str_mv info:eu-repo/semantics/workingPaper
info:eu-repo/semantics/submittedVersion
Documento de trabajo
http://purl.org/coar/resource_type/c_8042
info:ar-repo/semantics/documentoDeTrabajo
format workingPaper
status_str submittedVersion
dc.identifier.none.fl_str_mv http://sedici.unlp.edu.ar/handle/10915/46229
url http://sedici.unlp.edu.ar/handle/10915/46229
dc.language.none.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv info:eu-repo/semantics/altIdentifier/url/http://www.depeco.econo.unlp.edu.ar/doctrab/doc101.pdf
info:eu-repo/semantics/altIdentifier/issn/1853-3930
dc.rights.none.fl_str_mv info:eu-repo/semantics/openAccess
http://creativecommons.org/licenses/by/4.0/
Creative Commons Attribution 4.0 International (CC BY 4.0)
eu_rights_str_mv openAccess
rights_invalid_str_mv http://creativecommons.org/licenses/by/4.0/
Creative Commons Attribution 4.0 International (CC BY 4.0)
dc.format.none.fl_str_mv application/pdf
dc.source.none.fl_str_mv reponame:SEDICI (UNLP)
instname:Universidad Nacional de La Plata
instacron:UNLP
reponame_str SEDICI (UNLP)
collection SEDICI (UNLP)
instname_str Universidad Nacional de La Plata
instacron_str UNLP
institution UNLP
repository.name.fl_str_mv SEDICI (UNLP) - Universidad Nacional de La Plata
repository.mail.fl_str_mv alira@sedici.unlp.edu.ar
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