Comparative advantage in (non-)routine production / Liza Archanskaia, Johannes Van Biesebroeck, Gerald Willmann
VerfasserArchanskaia, Liza ; Van Biesebroeck, Johannes ; Willmann, Gerald
ErschienenBielefeld, Germany : Universität Bielefeld, Faculty of Business Administration and Economics, May 2020
Elektronische Ressource
Umfang1 Online-Ressource (60 Seiten) : Diagramme
SerieWorking papers in economics and management ; Nr. 03-2020
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Comparative advantage in (non-)routine production [0.48 mb]

We illustrate a new source of comparative advantage that is generated by countries different ability to adjust to technological change. Our model in- troduces substitution of workers in codifiable (routine) tasks with more ef- ficient machines, a process extensively documented in the labor literature, into a canonical 2 2 2 Heckscher-Ohlin model. Our key hypothesis is that labor reallocation across tasks is subject to frictions, the importance of which varies by country. The arrival of capital-augmenting innovations trig- gers the movement of workers out of routine tasks, and countries with low labor market frictions become relatively abundant in non-routine labor. In the new equilibrium, more flexible countries specialize in producing goods that use non-routine labor more intensively. We document empirically that the ranking of countries with respect to the routine intensity of their exports is strongly related to labor market institutions and to cultural norms that influence adjustment to technological change, such as risk aversion or long- term orientation. The explanatory power of this mechanism for trade flows is especially strong for intra-EU trade.

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