In Transit
Do Immigrants’ Partisan Preferences Influence Americans’ Support for Immigration?
Daniel McDowell & David Steinberg
Journal of Experimental Political Science, forthcoming
Abstract:
This study examines whether Americans are more supportive of immigration when migrants share their partisan preferences. To address this question, we embedded a preregistered experiment in a nationally representative survey that was fielded the week before the 2024 US Presidential Election. The main experimental treatment provided information that some immigrant groups tend to favor Donald Trump and the Republican Party. This information reduced support for immigration among Democrats and increased support for immigration among Republicans. Our findings suggest that immigrants’ political identities impact public support for immigration. They also suggest that Trump’s apparent gains among immigrant voters in the 2024 election have the potential to reduce partisan polarization over immigration in the future.
The Dynamics of Technology Transfer: Multinational Investment in China and Rising Global Competition
Jaedo Choi et al.
NBER Working Paper, September 2025
Abstract:
US multinationals formed joint ventures in China for market access and lower labor costs. However, these ventures transfer technology to Chinese firms, fueling future competition. While individual firms weigh the risks to their own profits, they disregard the negative impact on other US firms and the broader economy, resulting in an over-investment that may reduce the US welfare. In our empirical analysis, industries with more joint ventures in China show positive spillovers to Chinese firms but negative outcomes for firms in the US. We develop a two-country model with oligopolistic competition, innovation, and joint ventures. For the US, the short-run gains from joint ventures are outweighed by long-run losses due to rising Chinese competition. Joint ventures benefit large US firms at the expense of small firms and the real wages of workers. A ban on joint ventures since 1999 would have boosted US welfare by 1.2 percent.
Substituting Talent with Transactions: Acquisitions as Responses to Immigration Restrictions
Jens Friedmann, Britta Glennon & Exequiel Hernandez
NBER Working Paper, September 2025
Abstract:
We examine how firms respond to talent scarcity caused by restrictive immigration policies. We argue that when firms cannot build capabilities internally through hiring, they alter their boundaries by engaging in corporate acquisitions to make up for the foregone talent and capabilities. Using data on 3,861 U.S. firms and their use of the H-1B visa program (2001-2020), we leverage two exogenous shocks -- the 2004 H-1B cap reduction and the 2007-2008 visa lottery -- and find causal evidence that firms make more acquisitions as their exposure to immigration restrictions rises. This effect is stronger for deals with purposes related to the skills of the foregone talent, for small acquisitions, for domestic targets, and for targets in places with higher concentrations of skilled workers.
Playing with Blocs: Quantifying Decoupling
Barthélémy Bonadio et al.
NBER Working Paper, September 2025
Abstract:
We adopt a data-driven approach to measure trade fragmentation over the period 2015-2023. Countries are classified into three groups according to changes in their trade costs with the US and China: those shifting toward the US bloc, those shifting toward the China bloc, and those with no change in alignment. Roughly one-quarter of countries moved toward each bloc, while about half showed no realignment. We document that while cross-bloc trade costs rose, they were accompanied by falling within-bloc trade costs. We use a quantitative model to compute the real income effects of this reconfiguration of the global trade costs. The median country in the world, and the median country within each bloc, has 0.4-0.6% higher real income as a result of the observed decoupling, contrary to the widespread belief that fragmentation has been welfare-reducing. Finally, we find a modest amount of bloc misalignment: the median country moving to the US bloc would actually be better off moving to the China bloc, and vice versa. These results suggest that trade decoupling does not always follow trade-driven economic interests.
Happily Ever After: Immigration, Natives’ Marriage, and Fertility
Michela Carlana & Marco Tabellini
Journal of Economic History, forthcoming
Abstract:
We study the effects of immigration on natives’ marriage, fertility, and family formation across U.S. cities between 1910 and 1930. Using a shift-share design, we find that natives living in cities that received more immigrants were more likely to marry, have children, and leave the parental house earlier. Our evidence suggests that immigration increased native men’s employment, thereby raising the supply of native “marriageable men.” We consider alternative channels -- such as compositional changes among the natives, sex ratios, natives’ cultural reactions, and economic competition faced by native women. We conclude that none of them, alone, can explain our results.
Who Pays for Tariffs Along the Supply Chain? Evidence from European Wine Tariffs
Aaron Flaaen et al.
NBER Working Paper, October 2025
Abstract:
This paper examines the effects of tariffs along the supply chain using product-level data from a large U.S. wine importer in the context of the 2019-2021 U.S. tariffs on European wines. By combining confidential transaction prices with foreign suppliers and U.S. distributors as well as retail prices, we trace price impacts along the supply chain, from foreign producers to U.S. consumers. Although pass-through at the border was incomplete, our estimates indicate that U.S. consumers paid more than the government received in tariff revenue, because domestic markups amplified downstream price effects. The dollar margins per bottle for the importer contracted, but expanded for distributors/retailers. Price effects emerge gradually along the chain, taking roughly one year to materialize at the retail level. Additionally, we find evidence of tariff engineering by the wine industry to avoid duties, leading to composition-driven biases in unit values in standard trade statistics.
The Ripple Effects of China’s College Expansion on American Universities
Ruixue Jia et al.
NBER Working Paper, October 2025
Abstract:
China’s unprecedented expansion of higher education in 1999, increased annual college enrollment from 1 million to 9.6 million by 2020. We trace the global ripple effects of that expansion by examining its impact on US graduate education and local economies surrounding college towns. Combining administrative data from China’s college admissions system and US visa data, we leverage the centralized quota system governing Chinese college admissions for identification and present three key findings. First, the expansion of Chinese undergraduate education drove graduate student flows to the US: every additional 100 college graduates in China led to 3.6 Chinese graduate students in the US. Second, Chinese master’s students generated positive spillovers, driving the birth of new master’s programs, and increasing the number of other international and American master’s students, particularly in STEM fields. And third, the influx of international students supported local economies around college towns, raising job creation rates outside the universities, as well. Our findings highlight how domestic education policy in one country can reshape the academic and economic landscape of another through student migration and its broader spillovers.
What the Mercantilists Got Right
Dani Rodrik
NBER Working Paper, October 2025
Abstract:
Economics students today learn about mercantilism through Smith’s prism, as a series of logical and policy errors that Smith clarified and settled for good. But far from settled doctrine, mercantilism encapsulated a variety of pragmatic practices that survived Smith’s critique, often to good effect. It found echo in a continuous tradition of what later came to be called “developmentalism,” running from Alexander Hamilton and Friedrich List’s advocacy of trade protection to Hans Singer and Raul Prebisch’s ideas on import-substitution and, more recently, to East Asian models of export-oriented industrialization. Three of its core tenets hold continued appeal: the primacy of production and jobs (and of their composition) over consumption; preference for close, collaborative relationship between business and government over an arms’ length relationship; and the need for contextual, pragmatic, and often unorthodox policies over universal remedies and “best-practices.”
Jealousy of Trade: Exclusionary Preferences and Economic Nationalism
Alex Imas, Kristóf Madarász & Heather Sarsons
NBER Working Paper, October 2025
Abstract:
This paper presents a new framework for understanding economic nationalism based on an empirically-validated desire for dominance, which generates a preference for exclusionary policies. We incorporate such preferences into a model of international trade. The model predicts that exclusionary preferences lead people to favor tariffs and protectionist policies that harm both their trading partner's and their own consumption. This implies that higher prices caused by exclusionary policies like tariffs will be more acceptable than those caused by non-exclusionary policies. We provide support for these predictions through two survey experiments, which also account for the role of cognitive biases and misinformation.
Globalization and the Hinterland: International Trade and the Rural-Urban Divide
Edward Mansfield & Omer Solodoch
University of Pennsylvania Working Paper, September 2025
Abstract:
The growing political divide between rural and urban regions is often attributed to rural deindustrialization and import competition in manufacturing. Yet this cleavage emerged in many countries well before rural industrialization, pointing to underlying economic forces that existing accounts have overlooked. We argue that comparative advantage in agriculture is one such force: rural voters are more likely to support protectionist parties and policies when local agriculture is uncompetitive, as this sector is often central to their communities' economic and social life. Using a new harmonized dataset of surveys from 127 countries and extensive data on voting behavior, we find strong support for our argument. An additional analysis exploiting exogenous subnational variation in agricultural competitiveness in the United States post-NAFTA further corroborates our findings: The political divide between rural and urban voters is pronounced in uncompetitive regions but negligible in those possessing a comparative advantage in agriculture.
Linguistic fractionalization, trade, and welfare
Tamara Gurevich et al.
Economic Inquiry, October 2025, Pages 1201-1231
Abstract:
We examine the implications of linguistic fractionalization on trade and welfare, focusing on the United States. Our model identifies the direct and indirect effects of fractionalization on international and domestic trade and welfare. We construct a novel dataset to show that changes in fractionalization impact trade, leading to significant economic consequences. To highlight the general equilibrium implications, we conduct simulations on language policy-induced changes in the shares and the composition of Hispanic speakers within the United States, showing the importance of considering language policies, as they can yield substantial economic benefits but also sizable economic consequences stretching beyond national borders.