Firms, Trade and Globalization
Saturday, Jan. 4, 2020 10:15 AM - 12:15 PM (PDT)
- Chair: Nina Pavcnik, Dartmouth College
The Long and Short (Run) of Trade Elasticities
AbstractUsing the US Census firm-level data over the period 1992-2016, we identify aggregate, location-specific, and idiosyncratic plant-level shocks using an extension of the methodology of di Giovanni, Levchenko, and Mejean (2014). We then provide estimates of the contribution of idiosyncratic shocks to GDP fluctuations at the US county level and the overall US economy. Our main finding is that, paradoxically, idiosyncratic shocks account for a much greater share of the aggregate US fluctuations than of the fluctuations at the local level. We explore the correlation structure of locality- and firm-level shocks across space that can account for this finding.
Trade, Jobs, and Worker Welfare
AbstractWe develop and estimate a dynamic general equilibrium model of labor mobility with endogenous number of choices. In our model, trade shocks impact worker welfare not only through wages, but also via the number of job opportunities available to workers in different sectors and regions. Our framework combines the advantages of dynamic models of labor mobility and reduced-form estimation methods. First, we use a Bartik-type instrument to estimate causal impacts of export shocks on wages, employment and labor mobility, using detailed employer-employee panel data for Brazil. Second, we employ the same empirical strategy to estimate structural equations for the different components of the trade-induced change in worker welfare. Third, we use our model and the estimated structural parameters to perform counterfactual policy simulations. The structural IV estimates reveal that the job opportunities channel accounts for a sizable share of the gains in worker lifetime welfare following a positive export shock.
Does Capital Scarcity Matter?
AbstractThis paper quantifies the welfare impact of a permanent increase in the level of per capita income brought about by a temporary increase in the growth rate of GDP per capita following financial globalization in the form of capital account liberalization. In the immediate aftermath of liberalization, and under a range of assumptions, welfare differences between the financially-autarkic and integrated-equilibrium consumption paths are large. Yet when using infinite horizon consumption streams to compute welfare gains, the difference between the two consumption paths is small. The results suggest that a finite horizon framework may be more appropriate and policy-relevant for evaluating the welfare consequences of financial globalization policies that induce temporary growth effects but have a permanent impact on the level of per capita incomes.
- F6 - Economic Impacts of Globalization
- F1 - Trade