By introducing skill-intensity reversals into the Hecksher-Ohlin trade model this paper shows how the model captures the stylized facts of the global increase in skill premia, both in developed and in less-developed countries. The calibrated model is successful quantitatively: small price changes induce large increases in skill-premia. The analysis also suggests an explanation for protection of skill-unintensive sectors in less-developed countries.

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The literature on trade policy has up to now focused on the analysis of tariffs on final goods. This paper extends the approach by Grossman and Helpman (1994) with intermediate goods and labor interests. I can explain why tariffs are higher in final than in intermediate good sectors. Modeling labor interests gives new insights into the relations of trade and labor market policy. Recent results in literature have to be restated, since they depend crucially on the analysis of final good sectors.

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Little research has been devoted to unveil the channels and welfare implications of reductions in transport costs in NEG models. We use a transport economics view for this. User’s benefits arising from infrastructure improvements are evaluated in both labor mobility and input-output linkages models. By comparing direct benefits with total welfare changes we are able to discuss recent concerns on the role of transport costs in industry location, labor migration and regional disparities.

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Drug trafficking in the world, and especially in Latin America has been a growing problem in the last few decades. However, the effect of policies addresed to eradicate it seems ineffective. We develop a political-economic model in which a country receive FDI from the rest of the world subject to the reduction of the amount of drug produced by this country. However, the drug producers lobby the government and offer political contributions.

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We explore the link between import protection and household inequality using a general-equilibrium model. This yields predictions for linkages between tariffs, income levels, and observed inequality. Using a new inequality dataset we examine a cross-country sample. Results are consistent with the HOS model, where import protection worsens inequality in labor-intensive economies and the relationship shifts to one of falling inequality as income rises and we move to capital-intensive countries.

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International wage differences encourage FDI flows to low-wage countries, but the access of high-technology firms raises domestic wages, discouraging FDI. In equilibrium: (i) FDI inflows are more likely in large L-abundant technology-backward countries; (ii) the conditions that depress autarky wages enhance equilibrium wages if FDI takes place; (iii) higher domestic wages shifts domestic production toward a more K-int. mix; (iv) FDI patterns only depend upon differences in the fixed cost of FDI

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