nep-int New Economics Papers
on International Trade
Issue of 2014‒03‒08
thirty-two papers chosen by
Luca Salvatici
Universita' di Roma 3

  1. Determinants of trade margins: insights using state export data By Coughlin, Cletus C.
  2. An Empirical Examination of Trade Relations between New Zealand and China in the Context of a Free Trade Agreement By Sayeeda Bano
  3. The Real Exchange Rate and External Competitiveness in Egypt, Morocco and Tunisia By Zuzana Brixiova; Balázs Égert; Thouraya Hadj Amor Essid
  4. The Surprisingly Swift Decline of U.S. Manufacturing Employment By Justin R. Pierce; Peter K. Schott
  5. Incomplete VAT rebates to exporters : how do they affect China's export performance? By Julien Gourdon; Stéphanie Monjon; Sandra Poncet
  6. Networks and the Dynamics of Firms' Export Portfolio: Evidence for Mexico By Juan de Lucio; Raúl Mínguez; Asier Minondo; Francisco Requena
  7. Globalization, Infrastructure, and Inclusive Growth By Winters, L. Alan
  8. Option Values and the Choice of Trade Agreements By Elie Appelbaum; Mark Melatos
  9. Assessing the Experience of South Asia–East Asia Integration and India’s Role By Wignaraja, Ganeshan
  10. The India–Sri Lanka Free Trade Agreement and the Proposed Comprehensive Economic Partnership Agreement : A Closer Look By Saman Kelegama
  11. U.S. Natural Gas Exports and their Global Impacts By Vipin Arora; Yiyong Cai
  12. Rethinking the National Export Initiative By Caroline Freund
  13. Do Migrants Send Remittances as a Way of Self-Insurance? Evidence from a Representative Immigrant Survey By Batista, Catia; Umblijs, Janis
  14. When Banana Import Restrictions Lead to Exports: A Tale of Cyclones and Quarantine Policies By Ko, Chia Chiun; Frijters, Paul
  15. The Role of Commitment in Bilateral Trade By Dino Gerardi; Johannes Horner; Lucas Maestri
  16. South Caucasus–People's Republic of China Bilateral Free Trade Agreements: Why It Matters By Hovhanesian, Hasmik; Manasyan, Heghine
  17. Economic (In)Security and Gender Differences in Trade Policy Attitudes By Jeffrey Drope; Abdur Chowdhury
  18. The demand for foreign languages in Italian manufacturing By Roberto Antonietti; Massimo Loi
  19. How Do Terms of Trade Affect Productivity? The Role of Monopolistic Output Markets By Luis-Gonzalo Llosa
  20. Origin of FDI and domestic productivity spillovers: does European FDI have a 'productivity advantage' in the ENP countries? By Vassilis Monastiriotis
  21. Can Intra-Regional Trade Act as a Global Shock Absorber in Africa? By Mthuli Ncube; Zuzana Brixiova; Qingwei Meng
  22. The Slump and Immigration Policy in Europe By Hatton, Timothy J.
  23. Navigating in Troubled Waters: South American Exports of Food and Agricultural Products in the World Market, 1900-1938 By Vicente Pinilla; Gema Aparicio
  24. A Proposed Code to Discipline Local Content Requirements By Cathleen Cimino; Gary Clyde Hufbauer; Jeffrey J. Schott
  25. The effects of globalization on wage inequality: New insights from a dynamic trade model with heterogeneous firms By Braun, Sebastian; Lechthaler, Wolfgang; Mileva, Mariya
  26. When Do Remittances Facilitate Asset Accumulation? The Importance of Remittance Income Uncertainty By Amuedo-Dorantes, Catalina; Pozo, Susan
  27. When the claim hits: bilateral investment treaties and bounded rational learning By Lauge N. Skovgaard Poulsen; Emma Aisbett
  28. Interacting product and labor market regulation and the impact of immigration on native wages By Prantl, Susanne; Spitz-Oener, Alexandra
  29. The impact of Migrant Workers' Remittances on the Living Standards of families in Morocco: a Propensity Score Matching Approach By Jamal BOUOIYOUR; Amal MIFTAH
  30. Skilled Immigration and the Employment Structures of U.S. Firms By Sari Pekkala Kerr; William R. Kerr; William F. Lincoln
  31. Location determinants of migrant inflows: The Spanish case? By Luisa Alamá-Sabater; Maite Alguacil; Joan Serafí Bernat-Martí
  32. Foreign ownership and market power in banking: Evidence from a world sample By Manthos D. Delis; Sotirios Kokas

  1. By: Coughlin, Cletus C. (Federal Reserve Bank of St. Louis)
    Abstract: This paper identifies determinants of extensive (i.e., number of firms) and intensive (i.e., average exports per firm) trade margins, using state-level exports to 187 countries. A standard negative binomial count model is used to handle the issues of non-trading pairs and overdispersion in the extensive trade estimations. In addition to the standard gravity variables of distance and destination-country size, other factors affecting trade costs and export demand are explored. Following directly from a trade model based on heterogeneous firms, these other factors exhibit more consistent and statistically significant effects on the extensive than on the intensive trade margin. One noteworthy finding is that U.S. foreign direct investment has a positive effect on both margins. Also, a given determinant may affect both margins, but not necessarily in the same way. For example, communications infrastructure in the importing country affects the extensive margin positively and the intensive margin negatively.
    Keywords: state exports; extensive margin; intensive margin; negative binomial
    JEL: F10 R10
    Date: 2014–02–27
  2. By: Sayeeda Bano (University of Waikato)
    Abstract: This study examines the bilateral trade relations between New Zealand and China between 1980 and 2012. Specifically, it examines, first, the strength of the trade relationship using export and import intensity indices. Secondly, it identifies the degree of trade reciprocity using a 'trade reciprocity index'. Thirdly, it estimates the magnitude of intra-industry trade using the Grubel-Lloyd and Aquino indices. Fourthly, it analyses the results from these indices to consider how trade patterns, directions and trade relations have changed between 1980 and 2012. Finally, it assesses the future prospects of trade and economic cooperation between New Zealand and China in the context of the their 2008 free trade agreement. This is the first - and possibly the only study of its kind - since the signing of the trade agreement.
    Keywords: international trade; New Zealand-China trade; intra-industry trade; economic integration; trade reciprocity; trade intensity indices; FTA; CER
    JEL: F10 F02 F13 F14 F15
    Date: 2014–02–28
  3. By: Zuzana Brixiova; Balázs Égert; Thouraya Hadj Amor Essid
    Abstract: Egypt, Morocco and Tunisia face challenges competing on the global markets, as shown by their relatively low and stagnant export shares. The limited export competitiveness has hampered external demand, growth and employment. Applying, for the first time to North Africa, the stock-flow approach to the real equilibrium exchange rate, this paper evaluates the countries’ real exchange rate misalignments during the past three decades. While Egypt experienced periods of substantial misalignment, including in recent years, the exchange rates in Morocco and Tunisia have broadly reflected the underlying fundamentals. In all three countries structural factors are key to boosting exports, alongside of avoiding sizeable future misalignments. Intra-regional trade – both with North Africa and the rest of the continent – together with greater orientation to fast growing emerging markets could also raise countries’ external competitiveness.
    Keywords: real exchange rate misalignment, stock-flow model, competitiveness, trade, Africa
    JEL: F3 F41 C5 O1
    Date: 2014–01–01
  4. By: Justin R. Pierce; Peter K. Schott
    Abstract: This paper finds a link between the sharp drop in U.S. manufacturing employment beginning in 2001 and a change in U.S. trade policy that eliminated potential tariff increases on Chinese imports. Industries where the threat of tariff hikes declines the most experience more severe employment losses along with larger increases in the value of imports from China and the number of firms engaged in China-U.S. trade. These results are robust to other potential explanations of the employment loss, and we show that the U.S. employment trends differ from those in the EU, where there was no change in policy.
    Keywords: manufacturing, trade policy, uncertainty, offshoring, supply chains, employment, China, World Trade Organizations, PNTR
    JEL: F13 F16 J23
    Date: 2014
  5. By: Julien Gourdon; Stéphanie Monjon; Sandra Poncet
    Abstract: During the last decade, the Chinese government has frequently changed the value added tax (VAT) refund levels offered to exporters. Indeed, China's VAT system is not neutral, in particular because the exporters may not receive complete refund of the domestic VAT paid on their inputs. This paper investigates how changes in the VAT rebates affect export performance in China. Our empirical analysis relies on export volume data at the HS6 product level over the 2003-12 period. To address potential endogeneity, we exploit an eligibility rule that disqualifies processing trade with supplied materials from the rebates. We find that the adjustments to the VAT rebates have significant repercussions on the exported volume: a one percentage point increase in the VAT rebate can lead to a 7% increase in export volumes. This magnitude allows to better understand the strong resistance of China's exports amid the global recession.
    Keywords: VAT system;Export tax;Export performance;China
    JEL: F10 F14 O14
    Date: 2014–02
  6. By: Juan de Lucio (High Council of Spanish Chambers of Commerce, Spain); Raúl Mínguez (High Council of Spanish Chambers of Commerce, Spain); Asier Minondo (Deusto Business School, Spain); Francisco Requena (University of Sheffield, United Kingdom)
    Abstract: In this paper we use network-analysis tools to identify communities in the web of exporters' destinations. Next we use our network-based community measure as predictor of additional countries chosen by firms expanding their export destination portfolio. We defend that our network-based community measure is superior to extended gravity measures. This superiority stems from the fact that community is a revealed measure, is country-specific and can be calculated at the industry level. Using data on Mexican new exporters over the period 2003-2009, we show that the probability of choosing a new export destination multiplies almost by three if it belongs to the same community of any of the firm's previous destinations. The introduction of the network-based community variable improves the accuracy of the model up to 20% relative to a model that only includes gravity and extended gravity variables. We also show that industry-specific communities and general communities play similar roles in determining the dynamics of Mexican exporters' country portfolio.
    Keywords: export market; network analysis; modularity; extended gravity; Mexico
    JEL: F1
    Date: 2014
  7. By: Winters, L. Alan (Asian Development Bank Institute)
    Abstract: This paper covers threes issues: first, defining and measuring inclusive growth; second, the relationship between international trade and inequality; and third, the links between infrastructure and inequality. Both international trade and infrastructure make it easier for people to exchange goods and services and to increase income by allowing specialization, economies of scale, variety, etc. The gains are important not only in aggregate, but also at an individual level, and different people’s ability to take advantage of them varies. Hence each can increase inequality. Critical to sharing the gains from trade is mobility—specifically labor mobility, which determines the capacity of people to move from areas, sectors, skills, or firms of low or declining opportunity to those of higher opportunity. In the context of inclusive growth, this constitutes a challenge. However, the answer should not be to eschew opening up the economy or building infrastructure, but to do so in an informed way and seek to undertake complementary policies that help the less well-off take advantage of them.
    Keywords: trade; infrastructure; inequality; labor mobility; trade opening; globalization
    JEL: F16 H54
    Date: 2014–02–23
  8. By: Elie Appelbaum (Department of Economics, York University, Toronto, Canada); Mark Melatos
    Abstract: This paper analyzes how uncertainty influences the formation and design of regional trade agreements (TAs). Two sources of uncertainty — in demand and costs — are considered. Using a multi-stage game we show that, as long as some decisions are made after uncertainty is resolved, all TAs have option values. But, because TAs differ in their flexibility and degrees of coordination these option values vary across TAs. Thus, under uncertainty, the usual cost/benefit analysis that underlies the formation and design of TAs is altered to reflect these option values. We also show that due to the flexibility and coordination differences among TAs, their option values are affected differently by uncertainty. Consequently, the formation and design of TAs is also affected by the nature and degree of uncertainty. We demonstrate that the effects of an increase in uncertainty on the choice of TAs depend on the relative responsiveness of the TAs’ option values with respect to the change in uncertainty, which in turn depends on the convexity properties of the countries’ welfare functions under the different TAs. In particular, a TA whose option value is more responsive to a change in uncertainty becomes relatively more attractive when uncertainty increases. This enables us to predict which TAs are likely to emerge in an uncertain world. Using a specific example, we then show the effects of a change in both demand and cost uncertainty on the choice of TAs. We also examine the timing of the resolution of uncertainty and its effect on the choice of TAs and show that it can significantly impact the type of trade agreement that countries wish to form.
    Keywords: Trade Agreement, Free Trade Area, Customs Union, Uncertainty, Resolution of Uncertainty
    JEL: F12 F13 F15 D81
    Date: 2014–02–18
  9. By: Wignaraja, Ganeshan (Asian Development Bank Institute)
    Abstract: This paper examines the gains for South Asian economies from integrating with East Asia and India’s role in this process. Evidence of increased pan-Asian integration exists but the process is uneven. Bilateral trade has grown. As have bilateral foreign direct investment flows and free trade agreements (FTAs), albeit at a slower pace than trade. The integration process has been led by India and Pakistan with limited participation of smaller South Asian economies. Tackling key impediments in cross-border infrastructure, FTAs, trade barriers and business regulations, and barriers to services will foster further integration. Computable general equilibrium (CGE) simulations suggest that a South Asia–East Asia FTA offers the most gains for South Asia and that India has an incentive to include its neighbors in such an arrangement rather than going it alone with East Asia. The rest of South Asia will gain by deepening South Asian integration and fostering ties with East Asia.
    Keywords: pan-asian economic integration; south asia-east asia trade; infrastructure; reforms; free trade agreements
    JEL: F15 F17 O14 O24 O53
    Date: 2014–02–25
  10. By: Saman Kelegama (Asian Development Bank Institute (ADBI))
    Abstract: The India–Sri Lanka Free Trade Agreement has been in operation for more than a decade. The paper provides the Sri Lankan perspective of the Free Trade Agreement (FTA) highlighting both the positive outcomes and the negative aspects. The paper shows that the FTA has worked in favor of Sri Lanka but its full potential has not yet been realized due to market access problems in India, and the lack of supply capacity for some products in Sri Lanka. The India–Sri Lanka Comprehensive Economic Partnership Agreement addressed many of the negative aspects of the FTA in a broader economic integration framework but was unable come into operation due to public misconceptions and lack of entrepreneurial and political leadership in Sri Lanka.
    Keywords: The India–Sri Lanka Free Trade Agreement, The India–Sri Lanka Comprehensive Economic Partnership Agreement, economic integration framework, entrepreneurial and political leadership, Trade Potential
    JEL: F13 F15
    Date: 2014–02
  11. By: Vipin Arora; Yiyong Cai
    Abstract: We evaluate potential global impacts of increase in U.S. natural gas exports as a result of the shale gas boom. To our knowledge this is the first such analysis using a global economic model to understand this timely policy issue. Our primary conclusion is that world economic activity is higher through most of the simulation period [2014-2035] when U.S. natural gas exports rise. The overall U.S. results mirror the global ones, but the magnitude of income gains depends upon how the rate of increase and level of exports are determined, and the price elasticity of natural gas supply. The U.S. benefits more when export increases and levels depend on natural gas production rather than when they are pre-determined by assumption. The economic impacts on other natural gas importers and exporters can change as well based on how export levels are determined. The effects on natural gas prices, consumption, and production in individual countries vary with the scenarios and model parameter values.
    Keywords: natural gas, exports, shale, general equilibrium, international
    JEL: E17 F47 Q31 Q43
    Date: 2014–02
  12. By: Caroline Freund (Peterson Institute for International Economics)
    Abstract: Four years ago, President Barack Obama set the goal of doubling exports within five years and creating 2 million new export-related jobs. The strategy put in place, however, has failed to achieve superior growth. Freund argues that the emphasis on small and medium enterprises in the National Export Initiative, while attractive, was misguided and recommends a specific set of policies that the administration should concentrate on to boost exports. An export boom requires a system that encourages the largest firms to invest and expand exports and facilitates the rapid growth of new highly efficient firms so we get more export superstars. She recommends (1) maintaining a competitive exchange rate, (2) US leadership on market access trade agreements, and (3) improving the business climate, including training and migration to fill the skills gap, encouraging investment and innovation, more stable energy prices, and championing trade openness.
    Date: 2014–07
  13. By: Batista, Catia (Universidade Nova de Lisboa); Umblijs, Janis (Ragnar Frisch Centre for Economic Research)
    Abstract: Do migrants send remittances as a way of obtaining insurance? While this motive is theoretically suggested in the literature, the question of identifying this relationship empirically has only begun to be explored. Using a unique representative survey of 1500 immigrants in the Greater Dublin Area, Ireland, we find a positive and significant relationship between risk aversion and remittance behavior. Risk-averse individuals are more likely to send remittances home and are, on average, likely to remit a higher amount, after controlling for a broad range of individual and group characteristics. Consistent with a "purchase of self-insurance" motive to remit, we also provide evidence of more remittances sent by risk averse immigrants facing higher wage risks and remitting to individuals with more financial resources.
    Keywords: migration, risk aversion, remittances, insurance
    JEL: D81 F22 F24 J01 J08 J15 J61
    Date: 2014–02
  14. By: Ko, Chia Chiun (University of Queensland); Frijters, Paul (University of Queensland)
    Abstract: This paper examines the welfare loss of import restrictions on bananas in Australia and whether the import restrictions have turned into a particular form of export promotion. We set up a model in which there is free domestic entry, with banana producers accepting losses in normal years, off-set by large profits in years when cyclones destroy a large proportion of the banana plants because of sufficiently low elasticity of demand. Using the cyclones of 2006 and 2011 as exogenous events, we identify the elasticity of demand for bananas in Australia to be around -0.5. We indeed find limited evidence for an ‘over-shooting’ in terms of the supply response after these cyclones, leading to positive exports years after cyclones have hit and re-planted banana plants have become productive. Combining the elasticity estimates with information on turnover, we get an estimated welfare loss of 600 million dollars per year due to banana import restrictions.
    Keywords: competition, import restrictions, exogenous shocks, instrumental variables, surplus
    JEL: Q17 L2 C26 D61
    Date: 2014–02
  15. By: Dino Gerardi; Johannes Horner; Lucas Maestri
    Date: 2014–02–24
  16. By: Hovhanesian, Hasmik (Yerevan State University); Manasyan, Heghine (CRRC-Armenia)
    Abstract: Regional integration could be turned into a basic factor for economic growth if combined with a strong economic-development-oriented governmental strategy. The effects of regional integration can be maximized for countries stressing open trade as opposed to creating trade-diverting conditions, which requires drafting different kinds of agreements, particularly free trade agreements (FTAs). The impact of regional integration is significant, especially for small open economies—such as Armenia, Azerbaijan, and Georgia, which together comprise the South Caucasus—entering into an FTA with a large economy like the People’s Republic of China (PRC). At the same time, FTAs have mutual economic and geopolitical benefits for all participant countries. Moreover, taking into consideration the interests of countries like Turkey, Iran, and the Russian Federation in the economic and geopolitical potential of this region, the PRC may have to re-think its role in the South Caucasus. This paper assesses the PRC’s FTA strategy, the potential for regional integration in the South Caucasus, and the likely impacts of an FTA on the economies of Armenia, Azerbaijan, Georgia, and the PRC by using several specific trade indicators and a partial equilibrium modeling approach (SMART Model).
    Keywords: Free trade agreements; regionalization; South Caucasian countries; PRC; SMART model analysis
    JEL: F13 F15 F17 F43 F53
    Date: 2014–01–01
  17. By: Jeffrey Drope; Abdur Chowdhury
    Abstract: Over time and across countries, researchers have noted frequent and mostly unexplained gender differences in the levels of support for policies of free or freer trade: women tend to be less favorable toward policies of liberalizing trade than men. Using an economic security explanation based principally on a mobile factors approach, we find that it is not women generally who are more negative toward trade but particularly economically vulnerable women – i.e. women from the scarce labor factor. We utilize recent survey data on individuals’ attitudes toward different facets of trade and its effects across three disparate regions to examine this phenomenon empirically. An economic security approach helps to explain the marked differences in attitudes toward trade among lower- and higher-skilled females in developing and developed countries.
    Keywords: trade policy, gender difference, labor mobility, Latin America, Muslim countries
    JEL: F14 F20 O57
    Date: 2014–01–01
  18. By: Roberto Antonietti (Department of Economics & Management "Marco Fanno”, University of Padova); Massimo Loi (European Commission, Joint Research Centre, Econometric and Applied Statistics Unit, Ispra)
    Abstract: Relying on a rich firm-level dataset, we investigate the factors underlying the demand for foreign languages (FL) by Italian manufacturing firms. As main determinants, we focus on innovation and internationalization activities, these latter ranging from export to FDI. In the empirical analysis, we first estimate the probability of demanding for the knowledge of at least one FL through a set of univariate probit models, in which we also control for other characteristics required by firms, like the type of job, the level of education, the type of experience and the knowledge of informatics. Then, we make the demand for FL interact with the demand for these characteristics by estimating a set of bivariate probit models from which we extract the joint and conditional probabilities. Our estimates show that the probability to demand for FL increases with firm size, human capital intensity, engagement in R&D and in exporting goods, whereas the other internationalization activities are not significant when considered individually. Instead, we find a strong and positive effect on FL demand of increasing commitment to internationalization. Moreover, R&D and internationalization acts like observable substitutes on FL demand. When we further make FL demand interact with other required attributes, we find that the impact of increasing exposure to internationalization is higher when the firm also demands for professional occupations with a university degree, for specific experience and for the simultaneous knowledge of informatics. We conclude that FL are a strategic asset for firms and, from a labor demand perspective, are complementary to high levels of human capital.
    Keywords: foreign languages, innovation, internationalization, labor demand
    JEL: F16 J23 L60
    Date: 2014–02
  19. By: Luis-Gonzalo Llosa (AFP Profuturo)
    Abstract: This paper analyzes how terms of trade affect aggregate productivity using a two-country monopolistic competitive business cycle model driven by aggregate technology shocks. The inefficiency of the equilibrium implies that each country’s productivity is affected by the terms of trade. This introduces a novel mechanism for business cycle synchronization. Moreover, for each country, foreign technology shocks have almost the same effects as domestic technology shocks. The paper also shows how terms of trade movements can lead to excess volatility of consumption and highly persistent productivity. On the quantitative side, the model delivers a degree of business cycle synchronization that is close to the actual comovement of the U.S. economy with the rest of the world. The model also implies that for some small open economies, specially emerging economies, foreign shocks can outperform domestic shocks in explaining their business cycles. Finally, the paper provides a quantification of the influence of the terms of trade on emerging countries’ productivity and finds that it can be large.
    Keywords: Imperfect Competition, Input-Output Linkages, Terms of Trade, Business Cycles, Total Factor Productivity
    JEL: C67 E23 F12 F41 F43
    Date: 2014–02
  20. By: Vassilis Monastiriotis
    Abstract: The process of approximation between the EU and its ‘eastern neighbourhood’ has created conditions for deepening economic interactions and market integration, giving to the EU – and to EU businesses– an elevated role in the process of economic modernisation and transition in the neighbourhood countries. This raises the question as to whether European business activity in these countries produces indeed measureable economic advantages both in absolute and in relative terms (e.g., compared to business activity from other parts of the world). Similarly, a question arises as to whether European business activity reduces or amplifies spatial imbalances within the partner countries. This paper examines these issues for the case of capital flows (foreign ownership) and the related productivity spillovers, using firm-level data from the Business Environment and Enterprise Performance Survey (BEEPS)covering 28 transition countries over the period 2002-2009. We estimate the direct and intraindustry productivity effects of foreign ownership and examine how these differ across regional blocks (CEE, SEE and ENP), according to the origin of the foreign investor (EU versus non-EU), across geographical scales (pure industry versus regional spillovers) and for different types of locations (capital-city regions versus the rest). Our results suggest that FDI of EU origin plays a distinctive role in the countries concerned helping raise domestic productivity significantly more than investments from outside the EU. However, this process appears to operate in a spatially selective manner, thus enhancing regional disparities and spatial imbalances. This, then, assigns a particular responsibility for EU policy, as it continues to promote economic integration (and FDI flows) to its eastern neighbourhood, to devise interventions that will help redress these problems.
    JEL: N0
    Date: 2014–01
  21. By: Mthuli Ncube; Zuzana Brixiova; Qingwei Meng
    Abstract: The global financial crisis has reiterated the need for Africa to build resilience to global output shocks. In this paper we examine empirically the role of intra-regional and intra-African trade linkages in being an absorber of the global output shocks in two African regional economic communities. We find that deeper intra-regional and intra-African trade ties have helped the East African Community (EAC) absorb the global output shocks. In contrast, the Southern Africa Custom Union (SACU) region has been less able to cope with global output shocks partly due to weaker regional integration. Intra-regional and intra-African trade with fast-growing economies, together with geographically diversified trade links, can strengthen the capacity to absorb global shocks.
    Keywords: Intra-regional trade; output co-movement; regional economic communities, Africa
    JEL: E32 F42 F15 C53
    Date: 2014–02–01
  22. By: Hatton, Timothy J. (University of Essex)
    Abstract: Historical experience suggests that when a period of rising immigration is followed by a sudden slump, this can trigger a policy backlash. This has not occurred in the current recession. This paper examines three links in the chain between the slump and immigration policy. First, although immigration flows have responded to the slump, and immigrants have borne more than their share of the burden, this has done little to protect the employment of non-immigrants. Second, despite the recession for Europe as a whole, attitudes to immigration have not changed very much, and they have been influenced more by fiscal concerns than by rising unemployment. Third, while far right parties have used the recession to renew the political pressure for tougher immigration policies, governments have been constrained by the composition of immigration and by EU regulation.
    Keywords: European immigration, recession, immigration policy
    JEL: F22 F52 J15
    Date: 2014–02
  23. By: Vicente Pinilla (Faculty of Economics and Business Studies, University of Zaragoza, Zaragoza, Spain); Gema Aparicio (Agri-food Economic History Group, University of Zaragoza, Zaragoza, Spain)
    Abstract: The present study offers a new quantitative base to analyze the evolution of exports of agricultural and food products from South America in the complicated period between 1900 and 1938. The data base has been elaborated from the information published by the International Institute of Agriculture (IIA), in those years. The paper also constructs a terms of trade series for South American agricultural exports, using the data of Grilli-Yang (1988), updated by Pfaffenzeller (2007). It is considered to be the first time of offering for this period a series for the evolution for the terms of trade in the region which takes into account in its construction the relative weight of the exports of the distinct agricultural products. An explanation is provided of the position of South America in the world market for agricultural products on the eve of the First World War. Then it is analyzed first the impact of the war on the volume of agricultural exports from the region and in second place that of the Great Depression. Finally the evolution of the terms of trade of South American agricultural exports throughout the period is analyzed..
    Keywords: Latin American Economic History, International Agrifood Trade, Great Depression.
    JEL: J20 F14 N56 N70 N76 Q17
    Date: 2014–03
  24. By: Cathleen Cimino (Peterson Institute for International Economics); Gary Clyde Hufbauer (Peterson Institute for International Economics); Jeffrey J. Schott (Peterson Institute for International Economics)
    Abstract: The global economic crisis in 2008 produced pledges from countries around the world to avoid new barriers to trade and investment. These commitments were largely honored when it came to tariffs and quotas, but not when it came to nontraditional forms of protection, including behind-the-border, nontariff barriers such as local content requirements (LCRs). This Policy Brief analyzes the impact of the widely used requirements that local suppliers of goods, services, and even entire projects be favored. It explains why the steps to prevent such protectionism have been effective and further recommends a new World Trade Organization (WTO) code to constrain the use of LCRs, enhance transparency, expedite dispute resolution, and impose penalties for noncompliance.
    Date: 2014–02
  25. By: Braun, Sebastian; Lechthaler, Wolfgang; Mileva, Mariya
    Abstract: Fears of increasing inequality play a dominant role in current debates on how globalization is affecting our economies. After a brief review of recent trends in wage inequality, this policy paper presents new insights on the dynamic effect of trade liberalization on wage inequality. In the context of a dynamic trade model with costly labour mobility (Lechthaler and Mileva, 2013), we show that the effect of trade liberalization on wage inequality depends on i) the time horizon considered, ii) the degree of worker mobility, and iii) the degree of trade liberalization (partial/full). In the short-run, observed increases in wage inequality are driven by an increase in inter-sectoral wage inequality, while in the long run, wage inequality is driven by an increase in the skill premium. --
    Date: 2014
  26. By: Amuedo-Dorantes, Catalina (San Diego State University, California); Pozo, Susan (Western Michigan University)
    Abstract: A sizable literature has concluded that remittances impact the expenditure patterns of households. We explore how the uncertainty of remittance income inflows affects the accumulation of human, physical and financial assets of Mexican households, while accounting for the level of transfers from family abroad. We find that both the level and the uncertainty of remittance inflows raise asset accumulation among remittance-receiving households. Specifically, as predicted by the permanent income hypothesis and theories of precautionary saving, a one standard deviation increase in the uncertainty of remittance income raises the likelihood of household spending on asset accumulation by about 2 percentage points while raising the share of household expenditures on asset accumulation by 4 to 9 percent. These results suggest that both the level and the predictability of remittance income should be given full consideration in the analysis of household expenditure patterns and in the design of policies to leverage the most out of remittance inflows into developing economies.
    Keywords: international remittances, uncertainty, household expenditures, asset accumulation, Mexico
    JEL: F22 J20
    Date: 2014–02
  27. By: Lauge N. Skovgaard Poulsen; Emma Aisbett
    Abstract: Using the international investment regime as its point of departure, the paper applies notions of bounded rationality to the study of economic diplomacy. Through a multi-method approach, it shows that developing countries often ignored the risks of bilateral investment treaties (BITs) until they themselves became subject to an investment treaty claim. Thus the behavior of developing country governments with regard to the international investment regime is consistent with that consistently observed for individuals in experiments and field studies: they tend to ignore high-impact, low-probability risks if they cannot bring specific ‘vivid’ instances to mind.
    Keywords: bounded rationality; international political economy; international economic law; bilateral investment treaties
    JEL: F00 F02 F13 F20 F21 F23 F51 F53 K33
    Date: 2013–04
  28. By: Prantl, Susanne; Spitz-Oener, Alexandra (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Does interacting product and labor market regulation alter the impact of immigration on wages of competing native workers? Focusing on the large, sudden and unanticipated wave of migration from East to West Germany after German reunification and allowing for endogenous immigration, we compare native wage reactions across different segments of the West German labor market: one segment without product and labor market regulation, to which standard immigration models best apply, one segment in which product and labor market regulation interact, and one segment covering intermediate groups of workers. We find that the wages of competing native West Germans respond negatively to the large influx of similar East German workers in the segment with almost free firm entry into product markets and weak worker influence on the decision-making of firms. Competing native workers are insulated from such pressure if firm entry regulation interacts with labor market institutions, implying a strong influence of workers on the decision-making of profit-making firms." (Author's abstract, IAB-Doku) ((en))
    Keywords: Gütermarkt, Arbeitsmarkt, Regulierung, Binnenwanderung, Arbeitsmigration, institutionelle Faktoren, staatlicher Zusammenschluss, Handwerk, Handwerksordnung, Betriebsrat, Betriebsverfassungsgesetz, Arbeitsmarktentwicklung, regionaler Arbeitsmarkt, Einwanderung - Auswirkungen, Einkommenseffekte, Inländer, Westdeutschland, Ostdeutschland
    JEL: J61 L50 J3
    Date: 2014–02–25
  29. By: Jamal BOUOIYOUR; Amal MIFTAH
    Abstract: The impact of Migrant Workers' Remittances on the Living Standards of families in Morocco: a Propensity Score Matching Approach
    Date: 2014–02
  30. By: Sari Pekkala Kerr; William R. Kerr; William F. Lincoln
    Abstract: We study the impact of skilled immigrants on the employment structures of U.S. …firms using matched employer-employee data. Unlike most previous work, we use the …firm as the lens of analysis to account for a greater level of heterogeneity and the fact that many skilled immigrant admissions are driven by fi…rms themselves (e.g., the H-1B visa). OLS and IV speci…cations …find rising overall employment of skilled workers with increased skilled immigrant employment by …firm. Employment expansion is greater for younger natives than their older counterparts, and departure rates for older workers appear higher for those in STEM occupations compared to younger worker.
    Keywords: Immigration, Employment, Firms, Age, Scientists, Engineers, Inventors, H-1B.
    JEL: F15 F22 J44 J61 O31
    Date: 2014–01–01
  31. By: Luisa Alamá-Sabater (Department of Economics and IIDL, Universitat Jaume I, Castellón, Spain); Maite Alguacil (Department of Economics and IEI, Universitat Jaume I, Castellón, Spain); Joan Serafí Bernat-Martí (Department of Economics, Universitat Jaume I, Castellón, Spain)
    Abstract: Traditionally, Spain has been a destination for people coming from rich European countries. However, at the end of the last century, the pattern of these immigrant flows changed. The Spanish economic growth model, based on the construction industry, attracted large numbers of immigrants motivated by employment opportunities rather than by the climate conditions. In this article, we analyze the determinants that lead immigrants to move to a particular Spanish province, considering the economic and geographical differences across alternative destinations. We study this question empirically through the estimation of account models for panel data, covering the period 1998-2011. Our findings confirm the initial hypothesis that agglomeration and congestion economic forces play an important role in explaining the location decision of immigrant flows in Spanish provinces. They also reveal the importance of other regional factors, such as the productive structure of the territory, the labor market situation and the urban nature of the region. This result holds even after controlling for the specific, fixed or random, province factors.
    Keywords: migration flows, networks effects; migration flows, networks effects, account models
    JEL: R23 F22 C25
    Date: 2014
  32. By: Manthos D. Delis; Sotirios Kokas
    Abstract: Using a novel global data set with bank-year estimates of market power, we examine the impact of (i) the ownership status (foreign or domestic) of individual banks and (ii) the country-level trends in foreign bank presence on our market power estimates. We find that the ownership status of individual banks does not explain banks’ market power. In contrast, the country-level trends in foreign bank ownership have a positive and significant effect on banks’ market power that is primarily due to the fact that most foreign bank entry occurs through mergers and acquisitions and not through de novo penetration. We also find that the positive nexus between foreign bank presence and market power is considerably weaker in countries with well-capitalized banks.
    Keywords: Bank market power, Competition, Foreign banks, World sample
    Date: 2014–02

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