Essays on International Trade and Globalization

This thesis is composed of three essays on international economics with a particular focus on international trade and the effects of globalization. The first chapter presents new empirical evidence on the effects of trade on high skilled workers’ wages introducing two new sources of heterogeneity, skill ubiquity and sector complexity. Skill ubiquity describes the degree of specialization of the worker. Sector complexity relates to the number of skills required and their specialization. Increases in exports in more complex sectors are associated with increases of the wages of all workers and in particular of the highly specialized ones. Exports in the least complex sector is negative for the least specialized workers. Increases in imports have opposite effects. The second chapter presents a novel theoretical mechanism explaining the results reported in the first chapter. I build a general equilibrium monopolistic competition model with both multiple manufacturing heterogeneous sectors, differing in the number and the type of specializations required for production, and differently specialized workers. I allow only for partial mobility of workers across sectors according to the sectors' complexity and the workers' specialization. I study how globalization's effect changes according to each worker's specialization finding results in line with the first chapter. The third chapter introduces a novel theory of the reshoring phenomenon. We provide evidence for the importance of quality as main driver of reshoring decision and we develop a dynamic heterogeneous firms model in which firms decide where to locate production and the quality of produced variety. We find that the most productive firms will choose to produce in the developed domestic country, the second most productive firms will instead offshore in the first period and return in the next period, while the least productive firms will remain abroad both the periods. This paper is joint work with Marta Paczos.