Duty free
Trade Adjustment: Worker Level Evidence
David Autor et al.
NBER Working Paper, July 2013
Abstract:
In the past two decades, China's manufacturing exports have grown spectacularly, U.S. imports from China have surged, but U.S. exports to China have increased only modestly. Using representative, longitudinal data on individual earnings by employer, we analyze the effect of exposure to import competition on earnings and employment of U.S. workers over 1992 through 2007. Individuals who in 1991 worked in manufacturing industries that experienced high subsequent import growth garner lower cumulative earnings and are at elevated risk of exiting the labor force and obtaining public disability benefits. They spend less time working for their initial employers, less time in their initial two-digit manufacturing industries, and more time working elsewhere in manufacturing and outside of manufacturing. Earnings losses are larger for individuals with low initial wages, low initial tenure, low attachment to the labor force, and those employed at large firms with low wage levels. Import competition also induces substantial job churning among high-wage workers, but they are better able than low-wage workers to move across employers with minimal earnings losses, and are less likely to leave their initial firm during a mass layoff. These findings, which are robust to a large set of worker, firm and industry controls, and various alternative measures of trade exposure, reveal that there are significant worker-level adjustment costs to import shocks, and that adjustment is highly uneven across workers according to their conditions of employment in the pre-shock period.
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Avraham Ebenstein et al.
Review of Economics and Statistics, forthcoming
Abstract:
We link industry-level data on trade and offshoring with individual-level worker data from the Current Population Surveys from 1984 to 2002. We find that occupational exposure to globalization is associated with significant wage effects, while industry exposure has no significant impact. We present evidence that globalization has put downward pressure on worker wages through the reallocation of workers away from higher wage manufacturing jobs into other sectors and other occupations. Using a panel of workers, we find that occupation switching due to trade led to real wage losses of 12 to 17 percentage points.
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The Global Welfare Impact of China: Trade Integration and Technological Change
Julian di Giovanni, Andrei Levchenko & Jing Zhang
American Economic Journal: Macroeconomics, forthcoming
Abstract:
This paper evaluates the global welfare impact of China's trade integration and technological change in a quantitative Ricardian-Heckscher-Ohlin model implemented on 75 countries. We simulate two alternative productivity growth scenarios: a "balanced" one in which China's productivity grows at the same rate in each sector, and an "unbalanced" one in which China's comparative disadvantage sectors catch up disproportionately faster to the world productivity frontier. Contrary to a well-known conjecture (Samuelson 2004), the large majority of countries in the sample, including the developed ones, experience an order of magnitude larger welfare gains when China's productivity growth is biased towards its comparative disadvantage sectors. We demonstrate both analytically and quantitatively that this finding is driven by the inherently multilateral nature of world trade. As a separate but related exercise we quantify the worldwide welfare gains from China's trade integration.
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Chinese Mining in Latin America: A Comparative Perspective
Amos Irwin & Kevin Gallagher
Journal of Environment & Development, June 2013, Pages 207-234
Abstract:
Observers have expressed concern that Chinese mining companies operating in Latin America are more egregious violators of labor and environmental standards than other mining companies. Critics point to the case of one operation in particular - Shougang Hierro Peru - as evidence of China's threat to Latin American labor and environment. We combine archival research in Peru, personal interviews, and data analysis to examine the extent to which Shougang Peru is an outlier in labor and environmental performance relative to other foreign and Peruvian mining firms. We find that Shougang Hierro Peru has indeed established a poor labor and environmental record in Peru. However, a counterpart firm from the United States performed worse on many levels, and some Peruvian firms are not far behind. Such findings show that Chinese firm behavior should not be analyzed in isolation, especially in sectors such as mining where labor and environmental problems are endemic to the sector.
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Sweatshop Working Conditions and Employee Welfare: Say It Ain't Sew
J.R. Clark & Benjamin Powell
Comparative Economic Studies, June 2013, Pages 343-357
Abstract:
This study surveys workers at two firms accused of being sweatshops by the National Labor Committee. We find that the wages and working conditions are superior to the workers' prior employment. The mix of compensation between wages and working conditions reflects employee preferences and employees found their conditions less satisfactory when a firm capitulated to activist demands.
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Googling the WTO: What Search-Engine Data Tell Us About the Political Economy of Institutions
Krzysztof Pelc
International Organization, July 2013, Pages 629-655
Abstract:
How does international law affect state behavior? Existing models addressing this issue rest on individual preferences and voter behavior, yet these assumptions are rarely questioned. Do citizens truly react to their governments being taken to court over purported violations? I propose a novel approach to test the premise behind models of international treaty-making, using web-search data. Such data are widely used in epidemiology; in this article I claim that they are also well suited to applications in political economy. Web searches provide a unique proxy for a fundamental political activity that we otherwise have little sense of: information seeking. Information seeking by constituents can be usefully examined as an instance of political mobilization. Applying web-search data to international trade disputes, I provide evidence for the belief that US citizens are concerned about their country being branded a violator of international law, even when they have no direct material stake in the case at hand. This article constitutes a first attempt at utilizing web-search data to test the building blocks of political economy theory.
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China's fare share? The growth of Chinese exports in world trade
Steven Husted & Shuichiro Nishioka
Review of World Economics, September 2013, Pages 565-585
Abstract:
The growth of Chinese exports in market share over the past two decades is a singular event in the history of world trade. Using data from 1995-2010, we document this growth in a variety of ways. We show that the expanded trade is pervasive. Virtually every country in the world has seen China claim a larger share of its import market. Then, we use Constant Market Share analysis to determine which country or countries have lost market share as China's trade has grown. Contrary to much discussion in the popular press, we find strong evidence that other developing countries have not seen export shares fall as a result of China's gains. Rather, our results suggest that China's share growth has come largely at the expense of exporters based in developed countries, especially Japan and the United States.
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Inventories and antidumping: The case of orange juice trade
C.A. Carter & S. Mohapatra
Empirical Economics, August 2013, Pages 247-266
Abstract:
The United States and Brazil are key players in the international market for orange juice, mainly frozen concentrated orange juice (FCOJ). The U.S. orange juice industry benefits from one of the highest levels of import protection in U.S. agriculture. Additional trade protection was recently added with a U.S. industry victory in an antidumping trade suit against Brazil. We study the impact of FCOJ imports from Brazil on U.S. prices using time series econometric models and find only a weak FCOJ domestic price response to imports from Brazil, because extremely large U.S. inventories mute the price impact of any fluctuation in imports. Our findings imply that the antidumping tariffs were unjustified based on a material injury argument.
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Transatlantic steerage fares, British and Irish migration, and return migration, 1815-60
John Killick
Economic History Review, forthcoming
Abstract:
This article argues that the massive increase in transatlantic British and Irish emigration after 1840 was enabled by declining fares and ocean travel costs. New series of transatlantic steerage fares drawn from the unique Cope Line records at the Historical Society of Pennsylvania (HSP) show westward fares fell rapidly from 1830. Adjusted for British and US manual wages, westward travel costs, including provisions, almost halved between 1847 and 1851-3, when Irish migration peaked. Hence although the Irish had to leave Ireland, they might not otherwise have gone so extensively to North America. Eastward travel costs also fell after 1830, encouraging an unexpectedly large return migration to Britain in the late 1850s, and maybe earlier.
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Emigration and Wages: The EU Enlargement Experiment
Benjamin Elsner
Journal of International Economics, forthcoming
Abstract:
The enlargement of the European Union provides a unique opportunity to study the impact of the lifting of migration restrictions on the migrant sending countries. With EU enlargement in 2004, 1.2 million workers from Eastern Europe emigrated to the UK and Ireland. I use this emigration wave to show that emigration significantly changed the wage distribution in the sending country, in particular between young and old workers. Using a novel dataset from Lithuania, the UK and Ireland for the calibration of a structural model of labor demand, I find that over the period of five years emigration increased the wages of young workers by 6%, while it had no effect on the wages of old workers. Contrary to the immigration literature, there is no significant effect of emigration on the wage distribution between high-skilled and low-skilled workers.
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One world of labour regulation, two worlds of trade: Examples of Belgium and Brazil
Michael Huberman
European Review of Economic History, August 2013, Pages 251-271
Abstract:
Supposedly, labour regulation makes firms less competitive in international markets. This paper studies the adoption of labour laws in Belgium before 1914 and Brazil in the 1920s. In the two countries, regulation induced investments in new plant and equipment. The rise in labour productivity made Belgian firms better exporters in the context of expanding world trade. Brazil did not reap similar gains because international trade was collapsing.
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Huimin Xu, Ada Leung & Ruoh-Nan (Terry) Yan
Journal of Consumer Behaviour, July/August 2013, Pages 285-292
Abstract:
Although a large body of research has documented country-of-origin effects, very few works have inquired systematic differences in the content of national stereotypes that shape attitudes toward foreign products and their manufacturers. Drawing from the stereotype content model, the authors propose that the often ignored warmth dimension of the origin country is as important as (sometimes more important than) the well-studied competence dimension in certain situations. As shown in two studies, perceived warmth of the origin country predicts purchase intention in normal situations as well as after product failure.
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Do Natural Resources Attract Nonresource FDI?
Steven Poelhekke & Frederick van der Ploeg
Review of Economics and Statistics, July 2013, Pages 1047-1065
Abstract:
A new and extensive panel of outward nonresource and resource FDI is used to investigate the effect of natural resources on the different components of FDI. Our main findings are as follows. First, for countries which were not a resource producer before, a resource discovery causes nonresource FDI to fall 16% in the short run and by 68% in the long run. Second, for countries that were already a resource producer, a doubling of resource rents induces a 12.4% fall in nonresource FDI. Third, on average, the contraction in nonresource FDI outweighs the boom in resource FDI. Aggregate FDI falls by 4% if the resource bonanza is doubled. Finally, these negative effects on nonresource FDI are amplified through the positive spatial lags in nonresource FDI. We also find that resource FDI is vertical, whereas nonresource FDI is of the export-fragmentation variety. Our main findings are robust to different measures of resource reserves and the oil price and to allowing sample selection bias.
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Andrew Long, Justin Kastner & Raymond Kassatly
Global Economy Journal, April 2013, Pages 25-46
Abstract:
Scholars at the intersection of agricultural trade policy and health regulation have speculated that some governments, under the pretext of health protection, have adopted food safety and plant and animal health regulations to shield domestic farmers from foreign competition. In this paper, we investigate the relationship between trade protection for agriculture and the number of trade-restricting sanitary and phytosanitary (SPS) regulatory notifications issued by World Trade Organization (WTO) members. We construct an empirical model to determine the influence of agricultural protectionism, agricultural interest groups, consumer sentiment, and institutional capacity on changes to a government's SPS rules. The findings suggest that governments' adoption of trade-restricting sanitary and phytosanitary regulations are influenced by agricultural protectionism, even after controlling for consumer awareness and institutional capacity. The evidence suggests that health related trade policies are substituting for more traditional forms of agricultural protectionism.
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How do foreign investors impact domestic economic activity? Evidence from India and China
Chotibhak Jotikasthira, Christian Lundblad & Tarun Ramadorai
Journal of International Money and Finance, forthcoming
Abstract:
There has been renewed advocacy for restrictions on international financial flows in the wake of the recent financial crisis. Motivated by this trend, we explore the extent to which cross-border flows affect real economic activity. Unlike previous research efforts that focus on aggregated capital flows, we exploit novel data on forced trading by global mutual funds as a plausible source of exogenous flow shocks. Such forced trading is known to generate large liquidity and price effects, but its real impacts have not been studied extensively. We find that both country- and firm-level investment growth rates are significantly affected by these exogenous capital shocks, and that their effect is more pronounced for firms whose marginal investment decisions are more equity-reliant.
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Credit constraints, inequality and the growth gains from trade
Mauro Caselli
Economics Letters, October 2013, Pages 43-47
Abstract:
This paper tests the hypothesis that, in the presence of credit constraints, higher wealth inequality affects negatively the growth gains from trade liberalisation. Variations in the growth rate of value added - decomposed in the growth rate of the number of establishments and the growth rate in average size - of manufacturing industries in 34 developing countries before and after trade liberalisation are used to study the effects of inequality on the difference in growth under liberalised and nonliberalised regimes. The results show that the number of firms in industries with high dependence on external finance in countries with higher inequality grow significantly slower, in both statistical and economic terms, than in industries with low dependence on external finance in countries with lower inequality following a trade liberalisation relative to the closed-economy period.