This paper estimates the quality of U.S. imports using a procedure that relaxes the strong quality-equals-price assumption. The quality measures are derived from a nested logit demand system, based on Berry (1994), that embeds preferences for both horizontal and vertical attributes. Quality is the vertical component of the estimated model and captures the mean valuation that U.S. consumers attach to an imported product. The procedure utilizes both unit value and quantity information to infer quality and has a straightforward intuition: conditional on price, imports with higher market shares are assigned higher quality. Importantly, the procedure requires no special data beyond what is readily available in standard disaggregate trade data. It is also easy to implement; here, I estimate separate demand curves for approximately hundreds of manufacturing industries. Moreover, the procedure recovers quality at the finest level of product aggregation available (for the U.S. data, this is the ten-digit HS level). The inferred qualities indicate that developed countries export higher quality products relative to developing countries. This finding is consistent with Schott (2004) who uses unit values to proxy for quality. However, the estimates also reveal substantial heterogeneity in product markets' scope for quality differentiation, or quality ladders, which I measure as the range of qualities within the product market. In markets with a larger scope for quality differentiation, or a "long" quality ladder, unit values are relatively more correlated with the estimated qualities. In these markets, prices appear to be appropriate proxies for quality. In contrast, prices appear to be less appropriate proxies for quality in markets with a narrow range of estimated qualities ("short" ladder markets). This provides suggestive evidence that expensive imports in short-ladder markets coexist with cheaper rivals due to horizontal product differentiation. That is, although the average U.S. consumer attaches a low valuation to the expensive import, there is a fraction of consumers who still value the product. This heterogeneity underscores the drawback in invoking the quality-equals-price assumption, particularly for products characterized by short quality ladders. I use this heterogeneity in ladder lengths to demonstrate that quality specialization has important implications for the U.S. labor market. The public's fear of globalization is often rooted in the vulnerability or, to use Edward Leamer's terminology, the contestability of jobs. According to Leamer, the contestable jobs are those where “wages in Los Angeles are set in Shanghai” (Leamer (2006), p. 5). A recent study by Bernard Jensen, and Schott (2006) provides evidence that the probability of U.S. plant survival and employment growth are negatively associated with an industry's exposure to import penetration, particularly from low-wage countries. However, while low-wage competition negatively affects output and employment growth, the impact is heterogeneous across industries. For instance, between 1980 and the mid-1990s, electronics (SIC 36) experienced greater lowThis paper estimates the quality of U.S. imports using a procedure that relaxes the strong quality-equals-price assumption. The quality measures are derived from a nested logit demand system, based on Berry (1994), that embeds preferences for both horizontal and vertical attributes. Quality is the vertical component of the estimated model and captures the mean valuation that U.S. consumers attach to an imported product. The procedure utilizes both unit value and quantity information to infer quality and has a straightforward intuition: conditional on price, imports with higher market shares are assigned higher quality. Importantly, the procedure requires no special data beyond what is readily available in standard disaggregate trade data. It is also easy to implement; here, I estimate separate demand curves for approximately hundreds of manufacturing industries. Moreover, the procedure recovers quality at the finest level of product aggregation available (for the U.S. data, this is the ten-digit HS level). The inferred qualities indicate that developed countries export higher quality products relative to developing countries. This finding is consistent with Schott (2004) who uses unit values to proxy for quality. However, the estimates also reveal substantial heterogeneity in product markets' scope for quality differentiation, or quality ladders, which I measure as the range of qualities within the product market. In markets with a larger scope for quality differentiation, or a "long" quality ladder, unit values are relatively more correlated with the estimated qualities. In these markets, prices appear to be appropriate proxies for quality. In contrast, prices appear to be less appropriate proxies for quality in markets with a narrow range of estimated qualities ("short" ladder markets). This provides suggestive evidence that expensive imports in short-ladder markets coexist with cheaper rivals due to horizontal product differentiation. That is, although the average U.S. consumer attaches a low valuation to the expensive import, there is a fraction of consumers who still value the product. This heterogeneity underscores the drawback in invoking the quality-equals-price assumption, particularly for products characterized by short quality ladders. I use this heterogeneity in ladder lengths to demonstrate that quality specialization has important implications for the U.S. labor market. The public's fear of globalization is often rooted in the vulnerability or, to use Edward Leamer's terminology, the contestability of jobs. According to Leamer, the contestable jobs are those where “wages in Los Angeles are set in Shanghai” (Leamer (2006), p. 5). A recent study by Bernard Jensen, and Schott (2006) provides evidence that the probability of U.S. plant survival and employment growth are negatively associated with an industry's exposure to import penetration, particularly from low-wage countries. However, while low-wage competition negatively affects output and employment growth, the impact is heterogeneous across industries. For instance, between 1980 and the mid-1990s, electronics (SIC 36) experienced greater low