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type="main" xml:id="ecin12139-abs-0001"> Changes in the costs of trading inputs or final goods affect establishment-level job flows. Using a longitudinal database containing the universe of manufacturing establishments in California from 1992 to 2004, we find that a decline in input or final-good trade costs is associated with job destruction in the least productive establishments, job creation in the most productive establishments, and an increase in the death likelihood of the least productive establishments. The evidence is consistent with predictions of models of trade with heterogeneous firms. Additionally, the evidence shows that the effects of input trade costs on establishment-level job flows are larger than the effects of final-good trade costs. (JEL F14, F16)

Offshoring reallocates jobs inside firms, between firms, and across sectors, affecting the economy-wide unemployment rate. We study these channels in a model with labor market frictions and two sectors-a differentiated-good sector comprising heterogeneous firms that can offshore, and a homogeneous-good sector. A decline in offshoring costs affects intrafirm and intrasectoral reallocation of jobs in the differentiated-good sector through a selection effect, a productivity effect, and a job-relocation effect. The key parameters determining the impact of offshoring on jobs at various margins, as well as on the economy-wide unemployment rate, are the elasticity of substitution between inputs, the elasticity of substitution between varieties of differentiated goods, and the elasticity of demand for differentiated goods as a whole. Changes in search frictions affect unemployment both directly and through their interaction with offshoring. Highlights:

Eighty countries are surveyed for the period 1970 to 1995 in order to find reasons behind certain countries' importation of research and development-intensive products. The influence of both domestic and foreign direct investments and of the quality of intellectual property rights systems in technology imports is also presented.

To purchase or authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1467-9701.2007.01066.x Byline: Matthias Busse (1), Jose L. Groizard (2) Abstract: Recent evidence on the respective contributions of institutions and trade to income levels across countries has demonstrated that - once endogeneity is considered - institutional quality clearly dominates the effect of trade. We argue that overall trade is not the most appropriate measure for technology diffusion as a source of productivity growth and propose to focus on imports of research and development (R&D)-intensive goods instead. Overall, we confirm previous findings that institutions matter most and that overall trade is not positively associated with per-capita income levels. Yet this does not hold for technology trade, as there is a positive and significant linkage between technology imports and income levels. This outcome is robust to various model specifications, including an instrumental variables approach. Author Affiliation: (1)Hamburg Institute of International Economics and (2)Universitat de les Illes Balears, Palma de Mallorca