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Does the Labor Composition of Fixed Business Costs Matter?

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  • Akgul, Zeynep
  • Carrico, Caitlyn
  • Tsigas, Marinos

Abstract

Fixed business costs affect firm participation in domestic and export markets. Recent advances in theoretical and empirical trade literature on heterogeneous firms confirm that fixed costs can prevent firms with low productivity levels to produce and export. Particularly, in industries where these costs are high, the majority of firms struggle to survive, leading to potential substantial effects on the labor market. This paper investigates the effect of reductions in fixed costs on the U.S. labor market using the GTAP firm heterogeneity model, where the U.S. labor data are expanded to twenty two occupations. This extension enriches the labor market analysis as well as provides a venue to investigate the factors determining fixed costs. Particularly, we distinguish between the labor types that are employed to cover fixed costs and variable costs.

Suggested Citation

  • Akgul, Zeynep & Carrico, Caitlyn & Tsigas, Marinos, 2017. "Does the Labor Composition of Fixed Business Costs Matter?," Conference papers 332859, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332859
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    References listed on IDEAS

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    1. Zeynep Akgul & Nelson B Villoria & Thomas W Hertel, 2016. "GTAP-HET: Introducing Firm Heterogeneity into the GTAP Model," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 1(1), pages 111-180, June.
    2. Richard Kneller & Mauro Pisu, 2011. "Barriers to Exporting: What are They and Who do They Matter to?," The World Economy, Wiley Blackwell, vol. 34(6), pages 893-930, June.
    3. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
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