Jonathan Dingel (Chicago Booth) will present:
"The Determinants of Quality Specialization"
at 12:15pm on Tuesday, October 7, 2014 in Buchanan 051/TUCK
Lunch will be served at noon
Please sign up for a meeting, or dinner at:
If you will be attending the Lunch Seminar and have not already done so, please RSVP to Richard Rielly at TUCK so he can order the appropriate amount of food.
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Abstract
A growing literature suggests that high-income countries export high-quality goods. Two hypotheses may explain such specialization, with different implications for welfare, inequality, and trade policy. Fajgelbaum, Grossman, and Helpman (JPE 2011)
formalize the Linder (1961) conjecture that home demand determines the pattern of specialization and therefore predict that high-income locations export high-quality products. The factor-proportions model also predicts that skill-abundant, high-income locations
export skill-intensive, high-quality products (Schott, QJE 2004). Prior empirical evidence does not separate these explanations. I develop a model nesting both hypotheses and employ microdata on US manufacturing plants' shipments and factor inputs
to quantify the two mechanisms' roles in quality specialization across US cities. Home-market demand explains at least as much of the relationship between income and quality as differences in factor usage.