Empirical studies of international trade flows and related domestic policy considerations

Plan of investigation. The structure of this dissertation will consist of three primary components. The first section will consist of an empirical estimation of a testable hypothesis following the work of Helpman (1987) and Hummels & Levinsohn (1995). The data is drawn from several sources including world trade flows published by the National Bureau of Economic Research, macroeconomic data from the Penn World Tables, and education data supplied by the World Bank. The second section analyzes the patterns and structure of trade flows over the past 20 years utilizing the same data set as in the first essay. The purpose is to elucidate common patterns and relate them to the broader literature on intra-industry trade and trade flows, in general. The third section focuses on the domestic policy issue of growing wage disparity. Using a three factor, two good model the inter-relationships between capital, high-skilled labor and low-skilled labor are examined. Of particular interests are the cross-price elasticities and complementarity between factors, as well as, the effect of changes in endowments, prices and technology on returns.; Expected results. Preliminary findings indicate that the monopolistically competitive model fairs well in cross sectional tests when the sample of countries is inclusive of OECD and developing nations. Mixed results are obtained when the sample includes only OECD nations or in panel tests of the hypothesis. This may be partly attributed to an accounting issue stemming from differences in vertical vs. horizontal intra-industry trade. This issue is taken up in the second section as trade flows are examined more closely for 'stylized facts' and trends. Of importance is the chain of production and trade of intermediate products between countries of different levels of development. Finally, the third essay concerning the role of trade, technology and factor supplies on wage inequality in the U.S. will elucidate the relative contribution of each of these components on changes in factor returns. Since other studies have found limited fluctuations in relative prices, it is expected that factor supplies and technology (particularly the substitutibility-complementarity between factors) will have a greater impact on wages then trade. (Abstract shortened by UMI.)...