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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

Working Paper
International trade and labor reallocation: misclassification errors, mobility, and switching costs
Dvorkin, Maximiliano (2022-08-12)
Over the last few decades, international trade has increased at a rapid pace, altering domestic production and labor demand in different sectors of the economy. A growing literature studies the heterogeneous effects of trade shocks on workers’ employment and on welfare when reallocation decisions are costly. The estimated effects critically depend on data on workers’ reallocation patterns, which is typically plagued with coding errors. In this paper, I study the consequences of misclassification errors for estimates of the labor market effects of international trade and show that ...
Working Papers , Paper 2021-014

Working Paper
New-Keynesian Trade: Understanding the Employment and Welfare Effects of Trade Shocks
Ulate, Mauricio; Vasquez, Jose P.; Rodriguez-Clare, Andres (2020-09-01)
There is a growing empirical consensus that trade shocks can have important effects on unemployment and nonemployment across local-labor markets within an economy. This paper introduces downward nominal wage rigidity to an otherwise standard quantitative trade model and shows how this framework can generate changes in unemployment and nonemployment that match those uncovered by the empirical literature studying the “China shock.” We also compare the associated welfare effects predicted by this model with those in the model without unemployment. We find that the China shock leads to ...
Working Paper Series , Paper 2020-32

Working Paper
International trade and labor reallocation: misclassification errors, mobility, and switching costs
Dvorkin, Maximiliano (2021-12-03)
Over the last few decades, international trade has increased at a rapid pace, altering domestic production and labor demand in different sectors of the economy. A growing literature has studied the heterogeneous effects of trade shocks on workers’ industry and occupation employment and on welfare when reallocation decisions are costly. The estimated effects critically depend on data on workers’ reallocation patterns, which is typically plagued with coding errors. In this paper, I study the consequences of misclassification errors for estimates of the labor market effects of international ...
Working Papers , Paper 2021-014

Working Paper
International trade and labor reallocation: misclassification errors, mobility, and switching costs
Dvorkin, Maximiliano (2021-12-08)
Over the last few decades, international trade has increased at a rapid pace, altering domestic production and labor demand in different sectors of the economy. A growing literature has studied the heterogeneous effects of trade shocks on workers’ industry and occupation employment and on welfare when reallocation decisions are costly. The estimated effects critically depend on data on workers’ reallocation patterns, which is typically plagued with coding errors. In this paper, I study the consequences of misclassification errors for estimates of the labor market effects of international ...
Working Papers , Paper 2021-014

Working Paper
Globalization and inflation in Europe
Auer, Raphael; Degen, Kathrin; Fischer, Andreas M. (2010)
What is the impact of import competition from other low-wage countries (LWCs) on inflationary pressure in Western Europe? This paper seeks to understand whether labor-intensive exports from emerging Europe, Asia, and other global regions have a uniform impact on producer prices in Germany, France, Italy, Sweden, and the United Kingdom. In a panel covering 110 (4-digit) NACE industries from 1995 to 2008, IV estimates predict that LWC import competition is associated with strong price effects. More specifically, when Chinese exporters capture 1 percent of European market share, producer prices ...
Globalization Institute Working Papers , Paper 65

Working Paper
The 2025 Trade War: Dynamic Impacts Across U.S. States and the Global Economy
Rodríguez-Clare, Andrés; Ulate, Mauricio; Vasquez, Jose P. (2025-04-22)
We use a dynamic trade and reallocation model with downward nominal wage rigidities to quantitatively assess the economic consequences of the recent increase in the U.S. tariffs on imports from Mexico, Canada, and China, as well as the “reciprocal” tariff changes announced on “Liberation Day” and retaliatory measures by other countries. Higher tariffs trigger an expansion in U.S. manufacturing employment, but this comes at the expense of declines in service and agricultural employment, with overall employment declining as lower real wages reduce labor-force participation. For the ...
Working Paper Series , Paper 2025-09

Working Paper
Slowdown in Immigration, Labor Shortages, and Declining Skill Premia
Mandelman, Federico S.; Yu, Yang; Zanetti, Francesco; Zlate, Andrei (2024-01-16)
We document a slowdown in low-skilled immigration that began around the onset of the Great Recession in 2007, which was associated with a subsequent rise in low-skilled wages, a decline in the skill premium, and labor shortages in service occupations. Falling returns to education also coincided with a decline in the educational attainment of native workers. We then develop and estimate a stochastic growth model with endogenous immigration and training to rationalize these facts. Lower immigration leads to higher wages for low-skilled workers but also to higher consumer prices and lower ...
FRB Atlanta Working Paper , Paper 2024-1

Working Paper
The Labor Market Effects of Offshoring by U.S. Multinational Firms: Evidence from Changes in Global Tax Policies
Kovak, Brian K.; Sly, Nicholas; Oldenski, Lindsay (2017-12-20)
Estimating the causal effect of offshoring on domestic employment is difficult because of the inherent simultaneity of multinational firms? domestic and foreign affiliate employment decisions. In this paper, we resolve this identification problem using variation in Bilateral Tax Treaties (BTTs), which reduce the effective cost of offshore activity by mitigating double taxation. We derive a panel difference-in-differences research design from a standard model of multinational firms, demonstrating the simultaneity problem and showing how to resolve it using BTTs as an instrument for offshore ...
Research Working Paper , Paper RWP 17-12

Working Paper
Diversification and specialization of U.S. states
Koech, Janet; Wynne, Mark A. (2016-09-01)
This paper documents the evolution of the international relationships of individual U.S. states along three dimensions: trade, migration, and finance. We examine how specialized or diversified state economies differ in terms of the products they export and with whom they trade, the origins of the immigrants who live in the state, and the origins of the foreign banks operating in the state. We show that states that are diversified along one of these dimensions are often quite specialized along others. New York is?perhaps, not surprisingly?the most diversified state in terms of global linkages.
Globalization Institute Working Papers , Paper 284

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