Download or read book Essays in International Trade with Market Frictions written by Lijuan Yin and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis contains three essays on International Trade and Market Frictions. Chapter 1 investigates the effects of globalization on human capital investment under labor market frictions. I present a new economic geographical general equilibrium model with individuals' endogenous education choices in the institutional context of China. The model indicates that the expanding market access due to globalization, along with the restrictive household registration system and rural land policies of China, tends to intensify rural-urban college educational inequality, although globalization promotes the total human capital formation; such effects of market access on urban-rural dispersions vary across regions. Based on the testable predictions of the model from chapter 1, Chapter 2 quantified the effects imposed by market access on individuals' education decisions by using China Income Project Data for year 1995 and 2002. Chapter 2 demonstrated that each one percent increase in market access is associated with an increase in the difference between the probability of getting higher education for urban hukou holders by around 1.2 percentage points than that for rural hukou holders. Chapter 2 also provides a discussion of the econometric issues in identification and estimation of the effects of market access on individuals' education choices. Chapter 3 moves beyond labor market frictions to study the role of China's extensive subsidies in an open economy. We build a general equilibrium open economy model with heterogeneous firms to quantify the welfare effect of Chinese capital-biased subsidies. Firms are heterogeneous not in the productivities but also their capabilities to obtain subsidies from the government. Combining this two characteristics, the government decision rule is revealed as the distribution of subsidized firms which we can observe and calibrate from the Chinese firm-level data.