Foreign Stuff
Populism and the Skill-Content of Globalization
Frédéric Docquier et al.
Economic Journal, forthcoming
Abstract:
We propose new ways to measure populism, using the Manifesto Project Database (1960-2019) as main source of data. We characterize the evolution of populism over 60 years and show empirically that it is significantly impacted by the skill-content of globalization. Specifically, imports of goods which are intensive in low-skill labor generate more right-wing populism, and low-skill immigration shifts the distribution of votes to the right, with more votes for right-wing populist parties and less for left-wing populist parties. In contrast, imports of high-skill labor intensive goods, as well as high-skill immigration flows, tend to reduce the volume of populism.
Did Foreigners Pay America's Tariffs? Quantity Discounts, Scale Economies and Incomplete Pass-Through
Sharat Ganapati & Colin Hottman
NBER Working Paper, February 2026
Abstract:
Transaction-level quantity discounts are a pervasive feature of US trade, shaping both price variation and tariff incidence. Using administrative microdata, we show that these discounts reflect transaction-level scale economies rather than market power. Accounting for these micro-level economies resolves a key puzzle: while observed import prices rose one-for-one with 2018-2019 US tariffs, we show this was driven by the loss of scale economies as transaction sizes collapsed. Controlling for this scale effect, the strategic pass-through of tariffs to scale-free prices falls to 60 percent, implying foreign exporters absorbed a significant share of the burden through reduced markups.
To Find Relative Earnings Gains After the China Shock, Look Upstream and Outside Manufacturing
Justin Pierce, Peter Schott & Cristina Tello-Trillo
Federal Reserve Working Paper, January 2026
Abstract:
We find that US workers outside manufacturing exhibit relative earnings increases after US trade liberalization with China. These relative gains cumulate over time as the beneficial effect of a worker's upstream exposure -- increased competition from China in input markets -- more than offsets the detrimental impact of her own and downstream (customer) exposures. These relative gains are smaller for non-manufacturing workers with less ex ante firm tenure and lower initial earnings, and are absent among manufacturing workers due to a lack of upstream gains and stronger downstream losses.
Trading Goods for Lives: NAFTA’s Mortality Impacts and Implications
Amy Finkelstein, Matthew Notowidigdo & Steven Shi
NBER Working Paper, February 2026
Abstract:
We estimate the mortality impact of local labor market exposure to the 1994 North American Free Trade Agreement (NAFTA) as well as to other local area shocks, and provide a parsimonious empirical explanation for differently-signed mortality estimates across different sources of local labor market contractions. Leveraging spatial variation in exposure to Mexican important competition from NAFTA, we find that more exposed areas experienced larger increases in mortality. In the 15 years post-NAFTA, an area with average NAFTA exposure experienced an increase in annual, age-adjusted mortality of 0.68 percent (standard error = 0.19), an increase that more than erases prior estimates of the welfare gains from NAFTA’s nationwide economic benefits. Mortality increases appear across all broad age by sex groups, but are particularly pronounced among working-age men, a demographic that also experienced disproportionate NAFTA-induced declines in (primarily manufacturing) employment. Additional evidence from other local labor market shocks reveals a systematic pattern: declines in local area manufacturing employment increase mortality, while declines in local area non-manufacturing employment decrease mortality. These findings suggest that the sign and magnitude of any mortality impacts of future economic shocks likely depends critically on the extent to which employment declines are concentrated in the manufacturing sector.
Global value chains and labour standards: The race-to-the-bottom problem
Hyejoon Im & John McLaren
Economic Journal, forthcoming
Abstract:
We ask how globalization affects governments’ incentives to set labour standards for workers. In a stylized global value chain model, globalization by reducing trade costs or adding countries with complementary skills improves working conditions, whether set by employers or governments. Addition of countries with similar skills has the opposite effect. Equilibrium labour standards are actually stricter than optimal because each country passes some of the costs of its improved labour standards onto other countries (consumers of the final good, for example). Nash equilibrium tariffs make regulation of working conditions redundant, but multilateral reduction of tariffs brings them back into force.
Spillover Effects of Foreign Takeover Restrictions on Corporate Investment of Peer Firms: Evidence from CFIUS Denials
Vedran Capkun & Francesco Grazioli
International Review of Law and Economics, June 2026
Abstract:
The Committee on Foreign Investment in the United States (CFIUS) is a governmental body that can deny regulatory approval of foreign takeovers on national security grounds. We examine whether and how takeover restrictions imposed by CFIUS affect corporate investment of peer firms. We document a sharp increase in CFIUS denials of regulatory approval during the 2008-2019 period in which the Foreign Investment and National Security Act (FINSA) was in place. CFIUS denials are followed by a negative market reaction, a decrease in foreign takeovers, and a reduction in corporate investment across target firms’ industry peers. The decreases in corporate investment are more pronounced among peer firms that are financially constrained and that rely more on foreign investments. These findings deepen our understanding of the effects of foreign takeover restrictions on corporate investment of peer firms in the United States.
Offsetting Openness? The Impact of Gender Provisions on US Trade With Developing Countries
Seungbin Park & Megan Roosevelt
Political Research Quarterly, forthcoming
Abstract:
The inclusion of non-trade issue (NTI) provisions in preferential trade agreements (PTAs) -- extending beyond traditional trade matters to encompass labor, environmental, and gender commitments -- has become a notable trend in international trade. While existing research has focused on the motivations behind such provisions and their effects on non-trade objectives, there remains a significant gap in understanding their impacts on bilateral trade flows, especially in the context of North–South trade partnerships. Gender provisions, in particular, have fallen outside the main focus of research. To fill this gap, we ask: How do gender-related provisions in US PTAs with developing countries affect trade? We argue that gender provisions decrease US imports by raising production costs for developing countries, with stronger effects in sectors with higher female employment in the US. Using industry-level bilateral data encompassing all US trade with developing countries (1996–2022), we find that gender provisions reduce US imports, especially in female-dominated manufacturing industries. Our study highlights the hidden protectionist potential of deep trade agreements in rich democracies, while contributing to research on gendered policy outcomes and trade and development.
From Free Rider to Innovator: The Rise of China's Drug Development
Panle Jia Barwick, Hongyuan Xia & Tianli Xia
NBER Working Paper, March 2026
Abstract:
This paper examines China’s transition from pharmaceutical “free rider” to global innovator over the last decade. In 2010, China accounted for less than 8% of global clinical trials; by 2020, it had surpassed the US in annual registered clinical trial volume. To study this transformation, we compile a comprehensive, synchronized database spanning the pharmaceutical drug development supply chain, covering scientific publications, clinical trials, drug development milestones for China, the U.S., and Europe, alongside drug sales and government policies over the same period. We provide strong evidence that China’s rise was primarily driven by the National Reimbursement Drug List (NRDL) reform, which dramatically expanded the effective market size for innovative drugs. We document a sharp rise in both the quantity (86% increase) and novelty of drug trials post reform, with growth concentrated in reform-exposed disease categories, first- or best-in-class drugs, and among domestic firms. A decomposition exercise reveals that the NRDL reform accounts for 43% of the growth in oncology trial activity, nearly doubling the combined contribution of upstream knowledge accumulation and talent flows (24%), while other government policies play a minor role. Finally, dynamic gains from induced innovation exceed the reform’s static gains in consumer access to innovative drugs by threefold, underscoring the importance of accounting for the reform’s long-run effects on innovation incentives in addition to near-term improvements in drug affordability.
Mergers and Acquisitions in the Interstate Trade Network
Lei Kong & Xinyan Yan
Financial Review, forthcoming
Abstract:
Using a network framework, we show that cross-state mergers are more likely to occur in state pairs that trade more with each other. Moreover, mergers propagate across states along trade links: High merger activity in one state leads to subsequently high merger activity in its trading partner states. Exploiting state-level shocks and oil price changes, we show that this relationship is likely to be causal. The state-industry level analysis further indicates that merger propagation along trade links occurs not only within industries but also across industries in the supply chain. Finally, we show that the propagation effect is weaker in nontradable industries.