I'll trade you
Men, Women, Trade, and Free Markets
Edward Mansfield, Diana Mutz & Laura Silver
International Studies Quarterly, June 2015, Pages 303-315
Abstract:
In this paper, we provide one of the first systematic analyses of gender's effect on trade attitudes. We draw on a unique representative national survey of American workers that allows us to evaluate a variety of potential explanations for gender differences in attitudes toward free trade and open markets more generally. We find that existing explanations for the gender gap, most notably differences between men and women in economic knowledge and differing material self-interests, do not explain the gap. Rather, the gender difference in trade preferences and attitudes about open markets is due to less favorable attitudes toward competition among women, less willingness to relocate for jobs among women, and more isolationist non-economic foreign policy attitudes among women.
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Trade Competition and American Decolonization
Thomas Pepinsky
World Politics, July 2015, Pages 387-422
Abstract:
This article proposes a political economy approach to decolonization. Focusing on the industrial organization of agriculture, it argues that competition between colonial and metropolitan producers creates demands for decolonization from within the metropole when colonies have broad export profiles and when export industries are controlled by colonial, as opposed to metropolitan, interests. The author applies this framework to the United States in the early 1900s, showing that different structures of the colonial sugar industries in the Philippines, Hawaii, and Puerto Rico - diverse exports with dispersed local ownership versus monocrop economies dominated by large US firms - explain why protectionist continental-agriculture interests agitated so effectively for independence for the Philippines, but not for Hawaii or Puerto Rico. A comparative historical analysis of the three colonial economies and the Philippine independence debates complemented by a statistical analysis of roll call votes in the Hare-Hawes-Cutting Act supports the argument. In providing a new perspective on economic relations in the late-colonial era, the argument highlights issues of trade and empire in US history that span the subfields of American political development, comparative politics, and international political economy.
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There goes gravity: eBay and the death of distance
Andreas Lendle et al.
Economic Journal, forthcoming
Abstract:
We compare the effect of geographic distance on eBay and total international trade flows. We consider the same 61 countries and basket of goods for both types of transactions. We find the effect of distance to be on average 65% smaller on eBay. We argue this difference is due to a reduction of search costs; it increases with product differentiation and is higher when trade partners speak different languages, when corruption in the exporting country is high, and when uncertainty avoidance is high in the importing country. Moreover, eBay's seller-rating technology further reduces the distance effect on eBay.
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The Impact of Trade on Labor Market Dynamics
Lorenzo Caliendo, Maximiliano Dvorkin & Fernando Parro
NBER Working Paper, May 2015
Abstract:
We develop a dynamic labor search model where production and consumption take place in spatially distinct labor markets with varying exposure to domestic and international trade. The model recognizes the role of labor mobility frictions, goods mobility frictions, geographic factors, and input-output linkages in determining equilibrium allocations. We show how to solve the equilibrium of the model without estimating productivities, reallocation frictions, or trade frictions, which are usually difficult to identify. We use the model to study the dynamic labor market outcomes of aggregate trade shocks. We calibrate the model to 38 countries, 50 U.S. states and 22 sectors and use the rise in China's import competition to quantify the aggregate and disaggregate employment and welfare effects on the U.S. economy. We find that China's import competition growth resulted in 0.6 percentage point reduction in the share of manufacturing employment, approximately 1 million jobs lost, or about 60% of the change in the manufacturing employment share not explained by a secular trend. Overall, China's shock increases U.S. welfare by 6.7% in the long-run and by 0.2% in the short-run with very heterogeneous effects across labor markets.
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The Gilded Wage: Profit-Sharing Institutions and the Political Economy of Trade
Adam Dean
International Studies Quarterly, June 2015, Pages 316-329
Abstract:
Scholars of international political economy often argue that workers automatically share the same trade policy preferences as their employers. However, this approach assumes that trade policies that increase profits necessarily lead to increases in wages. In contrast, I argue that capital and labor are more likely to share the same trade policy preference when "profit-sharing institutions" permit capital to credibly commit that an increase in profits will lead to an increase in wages. In support of my argument, I present a structured, focused comparison of the American textile and steel workers' unions during the late nineteenth century. Both unions supported the high tariffs that protected their industries when credible profit-sharing institutions were in place, but did not support high tariffs when such institutions were absent.
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Stefan Zeume
University of Michigan Working Paper, December 2014
Abstract:
I exploit the passage of the UK Bribery Act 2010 as an exogenous shock to UK firms' cost of doing business in corrupt regions to study whether the ability to use bribes creates firm value. First, I find that UK firms operating in high-corruption regions of the world display a drop in firm value after the Act's passage. Foreign firms subject to the Act because they (i) have a UK subsidiary and (ii) operate in high-corruption regions also exhibit negative abnormal returns. Second, relative to comparable continental European firms, UK firms expand their network of subsidiaries less into high-corruption regions and their sales in such regions grow six percentage points more slowly. Third, non-UK industry peers competing directly with UK firms in specific corrupt countries experience positive spillovers from the passage of the Act. Taken together, these results suggest that bribes are indispensable for doing business in certain regions. The consequences of unilateral anti-bribery regulation for the competitiveness of affected firms warrant attention from policy makers.
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Cross-border Acquisitions and Labor Regulations
Ross Levine, Chen Lin & Beibei Shen
NBER Working Paper, June 2015
Abstract:
Do labor regulations influence the reaction of stock markets and firm profitability to cross-border acquisitions? We discover that acquiring firms enjoy smaller abnormal stock returns and profits when targets are in countries with stronger labor protection regulations, i.e., in countries where laws, regulations, and policies increase the costs to firms of adjusting their workforces. These effects are especially pronounced when the target is in a labor-intensive or high labor-volatility industry. Consistent with labor regulations shaping the success of cross-border deals, we find that firms make fewer and smaller cross-border acquisitions into countries with strong labor regulations.
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Resilience and reactivity of global food security
Samir Suweis et al.
Proceedings of the National Academy of Sciences, 2 June 2015, Pages 6902-6907
Abstract:
The escalating food demand by a growing and increasingly affluent global population is placing unprecedented pressure on the limited land and water resources of the planet, underpinning concerns over global food security and its sensitivity to shocks arising from environmental fluctuations, trade policies, and market volatility. Here, we use country-specific demographic records along with food production and trade data for the past 25 y to evaluate the stability and reactivity of the relationship between population dynamics and food availability. We develop a framework for the assessment of the resilience and the reactivity of the coupled population-food system and suggest that over the past two decades both its sensitivity to external perturbations and susceptibility to instability have increased.
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The Political Economy of Food Price Volatility: The Case of Vietnam and Rice
Murray Fulton & Travis Reynolds
American Journal of Agricultural Economics, July 2015, Pages 1206-1226
Abstract:
This article argues that the structure of the Vietnamese rice export system is, in political economy terms, a rational response to the volatility present in the international rice market. In particular, it is argued that the Vietnamese Food Agency, along with VINAFOOD-1 and VINAFOOD-2, have been structured so that they can benefit from the domestic demands for export restrictions anticipated to occur as a consequence of international price volatility and the psychological demand of consumers for price stability. In turn, the actions of these agencies also contribute to international price volatility and the resulting demand for export restrictions. Since the political and economic elite in Vietnam obtain both political and economic power from this system, it is unlikely to be replaced with more effective and efficient policies to combat domestic price volatility. Thus, continued volatility in the price of rice can be expected.
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Effects of Renminbi Appreciation on Foreign Firms: The Role of Processing Exports
Barry Eichengreen & Hui Tong
Journal of Development Economics, September 2015, Pages 146-157
Abstract:
We examine the impact of Chinese currency (renminbi) revaluation on firm valuations, focusing on the effect of surprise announcements of changes in China's currency policy on 9,753 manufacturing firms in 44 countries. Renminbi appreciation has no significant impact on the valuation of firms in sectors exporting to China on average. But this "non-result" confounds a positive effect on firms in sectors exporting final goods to China with a negligible effect on those providing inputs for China's processing exports. We also find no significant effect on firms in sectors competing with China at home and in third markets. But again this "non-result" confounds the positive effect on firms competing with China in final goods with an insignificant effect on firms competing with China's processing exports. When evaluating the effects of renminbi appreciation on other countries, it follows, distinguishing processing trade from trade in final goods is key.
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Foreign Institutional Ownership and the Global Convergence of Financial Reporting Practices
Vivian Fang, Mark Maffett & Bohui Zhang
Journal of Accounting Research, June 2015, Pages 593-631
Abstract:
This paper investigates whether foreign institutional investors affect the global convergence of financial reporting practices. Using several measures of reporting convergence, we show that U.S. institutional ownership is positively associated with subsequent changes in emerging market firms' accounting comparability to their U.S. industry peers. We identify this association using an instrumental variable approach that exploits exogenous variation in U.S. institutional investment generated by the JGTRRA Act of 2003. Further, we provide evidence of a specific mechanism - the switch to a Big Four audit firm - through which U.S. institutional investors affect reporting convergence. Finally, we show that, for emerging market firms, an increase in comparability to U.S. firms is associated with an improvement in the properties of foreign analysts' forecasts.
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Import Competition and the Cost of Capital
Jean-Noel Barrot, Erik Loualiche & Julien Sauvagnat
MIT Working Paper, January 2015
Abstract:
We investigate how the displacement risk associated with import competition is reflected in the cost of capital. We use shipping costs to measure the vulnerability of U.S. industries to import competition. We find that output and employment in high exposure industries is more sensitive to tariff cuts than in low exposure industries, consistent with the idea that they face a higher risk of being displaced by import competition. We then show that high exposure industries have a higher cost of capital. We confirm displacement risk of import competition is priced and covaries with the marginal utility of the representative agent.
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How Does the Entry of Large Discount Stores Increase Retail Employment? Evidence from Korea
Janghee Cho, Hyunbae Chun & Yoonsoo Lee
Journal of Comparative Economics, forthcoming
Abstract:
The Korean retail sector has undergone significant structural changes in conjunction with the rapid expansion of big-box stores since the mid-1990s. Using county-level data from Korea in 1997-2010, we examine the effects of the entry of large discount stores on local retail employment. Based on a differences-in-differences approach, our analysis shows that the entry of a large discount store leads to an increase of approximately 200 retail jobs in the county. Two thirds of this gain is attributable to the entry of the large store itself, and the other third is a result of the expansion of other retail sectors. In particular, we find that the entry of a large discount store increases employment in non-general merchandise sectors, such as bakeries, clothing stores, and electronics stores. Our finding suggests that the opening of a large discount store may have a spillover effect on the local retail sector, thereby leading to an overall increase in county employment. Such a finding of positive employment effects is in sharp contrast to previous findings on the employment effect of large retail chains, based primarily on the expansion of Wal-Mart in the U.S. While Wal-Mart competes with incumbent chain stores, large discount stores - the first nationwide large-scale chains introduced in Korea - may play the role of anchor stores. By providing modern shopping infrastructure and attracting new small stores into neighborhoods, these large discount stores have transformed local retail sectors from traditional shopping environments.