Blockades
How responsive is Trade Adjustment Assistance?
Sung Eun Kim & Krzysztof Pelc
Political Science Research and Methods, forthcoming
Abstract:
How responsive is the US’ Trade Adjustment Assistance (TAA) to the labor dislocation that results from trade integration? Recent findings suggest that the world's most ambitious trade adjustment program barely responds to import shocks, and that the shortfall is made up by disability insurance and early retirement. This holds considerable implications: TAA offers a lens onto the central question of whether developed democracies can effectively redistribute the gains from international economic integration. We take a closer look at these results. Using petition-level data over a 20-year period, we find that TAA is between 1.7 and 3.3 times more responsive than current estimates suggest. Yet the news is not all good. As we show, the responsiveness of TAA has decreased considerably since the 1990s, just as developed democracies started facing increasing pushback against liberalization. This shortfall, in turn, has political consequences: areas where TAA has been least responsive were also more likely to shift toward voting for Trump in the 2016 Presidential election. Our findings speak to the considerable challenge governments face in aiding workers “left behind” by liberalization.
The US-China Trade War and Global Value Chains
Yang Zhou
University of Minnesota Working Paper, October 2020
Abstract:
This paper studies the heterogeneous impacts of the US-China trade war through linkages in global value chains. By building a two-stage, multi-country, multi-sector general equilibrium model, this paper discusses how imports tariffs effect domestic producers through internal linkage within industry and external linkage across industries. The model validates that imports tariffs on Chinese upstream intermediate goods negatively affects US downstream exports, outputs and employment. Effects are strong in the US industries that rely much on targeted Chinese intermediate goods. In addition, this paper differentiates the impacts of the two rounds of the trade war by comparing tariffs on intermediate goods and consumption goods. This paper estimates that the trade war increases US CPI by 0.09% in the first round and 0.22% in the second round. Finally, this paper studies the welfare effects of the trade war. This paper estimates that the trade war costs China $35.2 billion, or 0.29% GDP, costs US $15.6 billion, or 0.08% GDP, and benefits Vietnam by $402.8 million, or 0.18% GDP.
Offshoring and Inflation
Diego Comin & Robert Johnson
NBER Working Paper, October 2020
Abstract:
Did trade integration suppress inflation in the United States? We say no, in contradiction to the conventional wisdom. Our answer leverages two basic facts about the rise of trade: offshoring accounts for a large share of it, and it was a long-lasting, phased-in shock. Incorporating these features into a New Keynesian model, we show trade integration was inflationary. This result continues to hold when we extend the model to account for US trade deficits, the pro-competitive effects of trade on domestic markups, and cross-sector heterogeneity in trade integration in a multisector model. Further, using the multisector model, we demonstrate that neither cross-sector evidence on trade and prices, nor aggregate time series price level decompositions are informative about the impact of trade on inflation.
A global decline in research productivity? Evidence from China and Germany
Philipp Boeing & Paul Hünermund
Economics Letters, forthcoming
Abstract:
In a recent paper, Bloom et al. (2020) find evidence for a substantial decline in research productivity in the U.S. economy during the last 40 years. In this paper, we replicate their findings for China and Germany, using detailed firm-level data spanning three decades. Our results indicate that diminishing returns in idea production are a global phenomenon, not just confined to the U.S.
Inter-State Competition and Transnational Capitalists across the North-South Divide: Different Strategies, New Configurations of Power
Amy Quark, Kristen Hopewell & Elias Alsbergas
Social Problems, forthcoming
Abstract:
Existing research emphasizes the rise of new coalitions of states from the global South, such as the BRICS, on one hand, and the rise of a transnational capitalist class on the other. Yet only a small body of work has considered how transnational capitalists shape, and are shaped by, inter-state competition. Research neglects explicitly comparative inquiries: do transnational capitalists in the global North and the global South interact with inter-state competition differently? This article analyzes two cases in which transnational firms in the global North and South attempted to shape state institutions at domestic and international levels to strengthen trade liberalization. We argue that, while firms in the global North and South increasingly share preferences for trade liberalization, the way in which these firms pursue that goal is shaped by their historical relationship to the institutions of U.S.-led hegemony. Transnational firms in the global South seek to foment inter-state competition in order to decenter U.S. leadership, while their counterparts in the North seek to minimize and accommodate inter-state competition to preserve U.S. leadership and their own private authority. Both the North and the South are contributing to the geographical re-centering of institutional power in the world economy.
Women’s Descriptive Representation and Gendered Import Tax Discrimination
Timm Betz, David Fortunato & Diana O'Brien
American Political Science Review, forthcoming
Abstract:
We identify a form of gender-based governmental discrimination that directly affects billions of women on a daily basis: the setting of import tariffs for gendered goods. These tax rates, which can differ across otherwise identical gender-specific products, often impose direct penalties on women as consumers. Comparing nearly 200,000 paired tariff rates on men’s and women’s apparel products in 167 countries between 1995 and 2015, we find that women suffer a tax penalty that varies systematically across countries. We demonstrate that in democracies, women’s presence in the legislature is associated with decreased import tax penalties on women’s goods. This finding is buttressed by a comparison of democracies and non-democracies and analyses of the implementation of legislative gender quotas. Our work highlights a previously unacknowledged government policy that penalizes women and also provides powerful evidence that descriptive representation can have a substantial, direct impact on discriminatory policies.
U.S. Robots and their Impacts in the Tropics: Evidence from Colombian Labor Markets
Adriana Kugler et al.
NBER Working Paper, October 2020
Abstract:
Previous studies for developed countries show negative short-run impacts of automation on employment and earnings. In this paper, we instead examine whether automation by a key trading partner can hurt workers in a developing country. We specifically focus in Colombia’s labor market, and how the automation in the U.S. impacts Colombian workers by replacing exports from Colombia for cheaper robot-made U.S. products. We use employer-employee matched data from the Colombian social security records combined with data on U.S. exposure to robots in different sectors from 2011 to 2016 to examine if robots in the U.S. are displacing workers in Colombia. We find that U.S. robots decrease employment and earnings for Colombian workers in those sectors of local labor markets that have high levels of automation -measured as robots per thousand workers- in the U.S. labor market. In terms of turnover, as expected, there is an increase in dismissals and a decrease in hires for workers in sectors highly impacted by robots in the U.S. Moreover, the negative displacement effects of robots are greater for women; older workers; workers employed in small and medium sized enterprises, and workers employed in manufacturing. Importantly, local labor markets which exported the most to the U.S. in the past, are also the most affected by the increased adoption of U.S. robots, suggesting that Colombian workers may be losing employment to automated jobs reshored back to the U.S. Our estimates suggest that during our period of analysis, the adoption of robots in the U.S. led to a cumulative loss of between 63,000 and 100,000 jobs in Colombia.
The effects of trade, aid, and investment on China's image in Latin America
Vera Eichenauer, Andreas Fuchs & Lutz Brückner
Journal of Comparative Economics, forthcoming
Abstract:
Using repeated cross-sectional survey data, we analyze whether China's growing economic engagement in Latin America has an effect on citizens’ perceptions of China within 18 Latin American countries over the 2002–2013 period. Our instrumental-variables regressions exploit exogenous variation in the supply of Chinese exports, aid, and investment. Specifically, we use China's market penetration of developing countries outside of Latin America as the instrumental variable. In contrast to the widespread criticism, we do not find evidence that China's growing economic activities in the respective countries diminish average attitudes towards China — neither at the national nor at the provincial level. However, China's economic engagement appears to contribute to more polarized opinions on China: more individuals develop either very positive or very negative opinions on China. We interpret this as suggestive evidence that China's economic engagement creates winners and losers.
Networks and financial war: The brothers Warburg in the first age of globalization
Harold James
Financial History Review, forthcoming
Abstract:
This article examines the geo-economic consequences of the financial panic of October 1907. The vulnerability of the United States, but also of Germany, contrasted with the absence of a crisis in Great Britain. The experience showed the fast-growing industrial powers the desirability of mobilizing financial power, and the article examines the contributions of two influential brothers, Max and Paul Warburg, on different sides of the Atlantic. The discussion led to the establishment of a central bank in the United States and institutional improvements in German central banking: in both cases security as well as economic considerations played a substantial role.
Sunshine or Curse? Foreign Direct Investment, the OECD Anti-Bribery Convention, and Individual Corruption Experiences in Africa
Samuel Brazys & Andreas Kotsadam
International Studies Quarterly, forthcoming
Abstract:
It remains unclear if foreign direct investment (FDI) benefits local citizens in host countries. Combining geo-referenced FDI data and household level surveys, this paper uses spatial-temporal techniques to assess how FDI impacts individual corruption experiences. We investigate if this relationship is conditional on the corruption levels, or engagement with the OECD's anti-bribery convention (ABC), of the FDI's source country. We find evidence that FDI flows reduce individual bribery experiences, but only when existing levels of corruption are high. We find it is FDI from comparatively more corrupt, and non-ABC engaging, countries that locates to areas of high corruption. Further, FDI appears to improve both the employment prospects and financial positions of local households. Collectively, we argue that these results suggest that individual empowerment via a wealth effect, rather than spillovers from firm professionalization or regulatory pressure mechanisms, is what stems individual corruption experiences.