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Working Paper
The effect of trade with low-income countries on U.S. industry
Auer, Raphael; Fischer, Andreas M. (2008)
When labor-abundant nations grow, their exports increase more in labor-intensive sectors than in capital-intensive sectors. We utilize this sectoral difference in how exports are affected by growth to identify the causal effect of trade with low-income countries (LICs) on U.S. industry. Our framework relates differences in sectoral inflation rates to differences in comparative advantageinduced import growth rates and abstracts from aggregate fluctuations and sector specific trends.> ; In a panel covering 325 manufacturing industries from 1997 to 2006, we find that LIC exports are associated ...
Globalization Institute Working Papers , Paper 14

Working Paper
On Terms of Trade, Offshoring Ties, and the Enforcement of Trade Agreements
Bandyopadhyay, Subhayu; Basu, Arnab K.; Chau, Nancy H.; Mitra, Devashish (2023-04)
This paper unpacks the role of offshoring in the enforcement of trade agreements. In a two-country model of task offshoring, we show that by depressing demand and thus demand for embodied labor, own-tariff effects on factor content weighted terms of trade are: (i) negative in upstream countries, backfiring on upstream workers, and (ii) positive in downstream countries which render imported labor tasks even cheaper. This progression in own-tariff effects on terms of trade along the supply chain presents a novel challenge to the effectiveness of dispute settlement rules designed to nullify ...
Working Papers , Paper 2022-039

Working Paper
Heterogeneous Agents Dynamic Spatial General Equilibrium
Dvorkin, Maximiliano (2023-03-22)
I develop a dynamic model of migration and labor market choice with incomplete markets and uninsurable income risk to quantify the effects of international trade on workers’ employment reallocation, earnings, and wealth. Macroeconomic conditions in different labor markets and idiosyncratic shocks shape agents’ labor market choices, consumption, earnings, and asset accumulation over time. Despite the rich heterogeneity, the model is highly tractable as the optimal consumption, labor supply, capital accumulation, and migration and reallocation decisions of individual workers across ...
Working Papers , Paper 2023-005

Working Paper
Globalization, Trade Imbalances and Labor Market Adjustment
Pessoa, João Paulo; Dix-Carneiro, Rafael; Reyes-Heroles, Ricardo M.; Traiberman, Sharon (2021-02-10)
We study the role of global trade imbalances in shaping the adjustment dynamics in response to trade shocks. We build and estimate a general equilibrium, multi-country, multi-sector model of trade with two key ingredients: (a) Consumption-saving decisions in each country commanded by representative households, leading to endogenous trade imbalances; (b) labor market frictions across and within sectors, leading to unemployment dynamics and sluggish transitions to shocks. We use the estimated model to study the behavior of labor markets in response to globalization shocks, including shocks to ...
International Finance Discussion Papers , Paper 1310

Working Paper
Does Trade Liberalization with China Influence U.S. Elections?
Che, Yi; Tao, Zhigang; Lu, Yi; Schott, Peter K.; Pierce, Justin R. (2016-03)
This paper examines the impact of trade liberalization on U.S. Congressional elections. We find that U.S. counties subject to greater competition from China via a change in U.S. trade policy exhibit relative increases in turnout, the share of votes cast for Democrats and the probability that the county is represented by a Democrat. We find that these changes are consistent with Democrats in office being more likely than Republicans to support legislation limiting import competition or favoring economic assistance.
Finance and Economics Discussion Series , Paper 2016-039

Working Paper
The geography of wealth: shocks, mobility, and precautionary savings
Dvorkin, Maximiliano; Greaney, Brian (2024-09-30)
The spatial distribution of wealth in the United States is very heterogeneous, with important differences within and across US states. We study the distribution of wealth in a country and how it is shaped by the characteristics earnings across regions, and by the frictions individuals face to move and reallocate across space. For this, we develop a tractable model of consumption, savings, and location choice with many regions, incomplete markets, and heterogeneous agents facing persistent and transitory income shocks. Our analysis focuses on the role of income shocks, precautionary savings, ...
Working Papers , Paper 2024-033

Working Paper
The Effect of Export Market Access on Labor Market Power: Firm-level Evidence from Vietnam
Hoang, Trang T.; Mitra, Devashish; Pham, Hoang (2024-08-09)
We examine the impact of an export market expansion created by the US-Vietnam Bilateral Trade Agreement (BTA) on labor market competition among Vietnamese manufacturing firms. We measure distortionary wedges between equilibrium marginal revenue products of labor (MRPL) and wages nonparametrically and find that the median firm pays workers 59% of their MRPL. The BTA permanently decreases labor market distortion in manufacturing by 3.4%, mainly for domestic private firms. The median distortion is 26% higher for women than men, and the decline in distortion for women drives the overall ...
International Finance Discussion Papers , Paper 1394

Working Paper
International trade and labor reallocation: misclassification errors, mobility, and switching costs
Dvorkin, Maximiliano (2023-12)
International trade has increased at a rapid pace in the last decades, altering production and labor demand in different sectors of the economy. The estimated effects of trade on employment and welfare critically depend on data about workers’ reallocation patterns, which is typically plagued with coding errors. I show that the estimated employment and welfare effects of international trade, and the estimated structural parameters of standard models are biased when the analysis uses data subject to misclassification errors. I develop an econometric framework to estimate misclassification ...
Working Papers , Paper 2021-014

Working Paper
Firm Heterogeneity and the Impact of Immigration: Evidence from German Establishments
Brinatti, Agostina; Morales, Nicolas (2021-12)
We use a detailed establishment-level dataset from Germany to document a new dimension of ﬁrm heterogeneity: large ﬁrms spend a higher share of their wage bill on immigrants than small ﬁrms. We show analytically that ignoring this heterogeneity in the immigrant share leads to biased estimates of the welfare gains from immigration. To do so, we set up and estimate a model where heterogeneous ﬁrms choose their immigrant share and then use it to quantify the welfare effects of an increase in the number of immigrants in Germany. Two new adjustment mechanisms arise under ﬁrm ...
Working Paper , Paper 21-16

Working Paper
Spoils of War: Trade Shocks and Segmented Labor Markets in Spain during WWI
Fuchs, Simon (2021-05-28)
How does intranational factor mobility shape the welfare effects of a trade shock? I provide evidence that during WWI, a demand shock emanated from belligerent countries and affected neutral Spain. Within Spain, labor predominantly reallocated locally, while the most affected provinces experienced drastic increases in wages and consumer prices. Embedding imperfect labor mobility in an economic geography model, I show that external demand shocks can improve allocative efficiency, but asymmetric shocks cause localized increases in wages and consumer prices instead of reallocation. Adjusting an ...
FRB Atlanta Working Paper , Paper 2021-14

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