Globalization Boosts Productivity and Reshapes Labor Markets Worldwide
The scientists wanted to see if including different types of businesses in a trade model changes the results. They made two models: one simple and one more complex, both based on the same information. When they made trade easier in the models, they found that not only did more companies start exporting, but also production shifted between industries. This shift caused changes in the prices of goods and services, affecting how different industries and workers get paid. The results show that including a variety of businesses in trade models can help us understand how free trade affects the economy in more ways than just making companies more efficient.