The Long and Short (of) Quality Ladders
Prices are typically used as proxies for countries' export quality. I relax this strong assumption by exploiting both price and quantity information to estimate the quality of products exported to the U.S. Higher quality is assigned to products with higher market shares conditional on price. The estimated qualities reveal substantial heterogeneity in product markets' scope for quality differentiation, or their "quality ladders.'' I use this variation to explain the heterogeneous impact of low-wage competition on U.S. manufacturing employment and output. Markets characterized by relatively shorter quality ladders are associated with larger employment and output declines resulting from low-wage competition.
I am especially grateful to my dissertation committee, Irene Brambilla, Penny Goldberg and Peter Schott, for guidance and support. I have benefited from conversations with Steve Berry, Ray Fisman, Juan Carlos Hallak, David Hummels, Kala Krishna, Chris Ksoll, Frank Limbrock, Alex Mcquoid, Nina Pavcnik, Siddharth Sharma, Gustavo Soares, Robert Staiger, Catherine Thomas, Daniel Trefler, Chris Udry, Eric Verhoogen, David Weinstein, Jeffrey Weinstein, and various seminar participants. Special thanks also to Amalavoyal Chari. All errors are my own. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.