Customs data reveal the heterogeneity and granularity of relationships among buyers and sellers, showing how more exports to a destination break down into more firms selling there and more buyers per exporter. We develop a quantitative general equilibrium model of firm‐to‐firm matching that builds on this insight to separate the roles of iceberg costs and matching frictions in gravity. In the cross section, we find matching frictions as important as iceberg costs in impeding trade, and more sensitive to distance. Because domestic and imported intermediates compete directly with labor in performing production tasks, our model also fits the heterogeneity of labor shares across French producers. Applying the framework to the 2004 expansion of the European Union, reduced iceberg costs and reduced matching frictions contributed equally to the increase in French exports to the new members. While workers benefited overall, those competing most directly with imports gained less, even losing in some countries entering the EU.
MLA
Eaton, Jonathan, et al. “Firm-to-Firm Trade: Imports, Exports, and the Labor Market.” Econometrica, vol. 94, .no 4, Econometric Society, 2026, pp. 1135-1170, https://doi.org/10.3982/ECTA20506
Chicago
Eaton, Jonathan, Samuel Kortum, and Francis Kramarz. “Firm-to-Firm Trade: Imports, Exports, and the Labor Market.” Econometrica, 94, .no 4, (Econometric Society: 2026), 1135-1170. https://doi.org/10.3982/ECTA20506
APA
Eaton, J., Kortum, S., & Kramarz, F. (2026). Firm-to-Firm Trade: Imports, Exports, and the Labor Market. Econometrica, 94(4), 1135-1170. https://doi.org/10.3982/ECTA20506
Supplement to "Firm-to-Firm Trade: Imports, Exports, and the Labor Market"
Jonathan Eaton, Samuel Kortum, and Francis Kramarz
The replication package for this paper is available at https://doi.org/10.5281/zenodo.18987001. The authors were granted an exemption to publish parts of their data because either access to these data is restricted or the authors do not have the right to republish them. However, the authors included in the package, on top of the codes and the parts of the data that are not subject to the exemption, a simulated or synthetic dataset that allows running the codes. The Journal checked the data and the codes for their ability to generate all tables and figures in the paper and approved online appendices. Whenever the available data allowed, the Journal also checked for their ability to reproduce the results. However, the synthetic/simulated data are not designed to produce the same results.
Serena Ng stepped down as Coeditor of the Monograph Series on June 30, 2026. On July 1st, Peter Arcidiacono became the new Coeditor responsible for theoretical and applied econometrics.
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