Research Seminar

The Effect of Trade Liberalization along the Firm Size Distribution: Case of the EU-Korea FTA — Sonali Chowdhry

27 Okt 2020


Sonali Chowdhry (Kiel Institute)


In 2011, a deep free trade agreement (FTA) between the Republic of Korea and the European Union entered into force. It is commonly seen as a leading example of a new generation agreement, since it focuses not only on tariff phase-outs but also on the reduction of non-tariff barriers (NTBs). It also contains provisions meant to benefit small and medium enterprises. We use data for French firms covering the period 2000 to 2016 to study how the FTA has affected exporters of different sizes. To do so, we estimate triple difference models that exploit the dimensionality of the data. We report strong evidence that firm size correlates positively with the percentage increase in exports, in both the intensive and extensive margins, resulting from tariffs reductions and lower non-tariff barriers. Consequently, the FTA, while increasing overall exports to Korea, has made the size distribution of French exporters more unequal.


Sonali Chowdhry (Kiel Institute) — Gabriel Felbermayr (Kiel Institute)


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