Essays on growth, trade and producer heterogeneity

This dissertation is composed of three essays exploring the role of producer heterogeneity in models of growth and trade. In the first essay; "A quantitative evaluation of the effect of trade on wage inequality in the US", we calibrate a standard trade model with directed technical change to the US economy to simulate the effect of trade opening on wage inequality. Our results indicate that trade may be an important factor to explain the change in the wage premium in the US between 1980 to 1995. In the second essay, "Trade reforms in a global competition model: the case of Chile", we use a global competition model of international trade with heterogeneous firms to evaluate the impact of trade reforms that occurred in Chile at the end of the 70s. We compare the predictions of the calibrated model in terms of productivity, plant turnover, job and trade flows with what occurred in reality using a comprehensive plant-level panel dataset for the manufacturing sector. The model explains several effects of liberalization reforms on industry performance. In the third essay, "Hysteresis in export markets", we develop a dynamic monopolistic competition model with heterogeneous firms to analyze the effects of uncertainty on international trade. Our model retains the main results of recent papers like Melitz (2003) and Bernard, Eaton, Jensen and Kortum (2003) and provides additional new predictions. The introduction of reentry export costs generates hysteresis in export participation by creating a band of coexistence within the stationary distribution of firms' productivities. The decision to export becomes history-dependent and new entrants and incumbent firms might sustain temporary negative profits before becoming profitable.