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on International Trade |
| By: | Mehmet Nazif (Department of Economics, Eastern Mediterranean University, Famagusta, Northern Cyprus via Mersin 10, Turkey); Glenn P. Jenkins (Department of Economics, Queens University, Kingston, Ontario, Canada and Cambridge Resources International Inc.) |
| Abstract: | This paper evaluates the potential welfare gains in the Mercosur region of South America as a benefit of improvement to the trade administrations. Improvements to border procedures and processes leading to border procedures can save billions of dollars for the region, create markets for exporters and enhance trade diversification for both imports and exports. Using a microeconomic model, we establish the benefit of improvement to trade administration processes by comparing the cost structures of Mercosur member states to two reference countries, Chile and Canada. We estimate that with recent trade figures, the region would benefit by in excess of USD 15 billion annually from reducing both the import and export sides of the trade administration costs to the level now enjoyed by these two reference countries. |
| Keywords: | trade facilitation, international trade, trade administration costs, trade transaction costs, Latin America, Mercosur |
| JEL: | F14 F13 D60 |
| Date: | 2024–07–18 |
| URL: | https://d.repec.org/n?u=RePEc:qed:dpaper:4620 |
| By: | James Lake (Department of Economics, University of Tennessee); Andrew Greenland (Department of Economics, North Carolina State University); John Lopresti (Department of Economics, William and Mary) |
| Abstract: | Against a backdrop of sharply rising inequality, the Tokyo Round of the GATT resulted in a 1.6 percentage point reduction in average US tariffs – larger than CUSFTA, NAFTA, and the liberalization accompanying the granting of PNTR to China. We construct a novel IV based on the so-called ``Swiss formula'' that governed Tokyo Round tariff liberalization to provide the first evidence of its effects on imports and inequality. Instrumented tariff reductions explain 17% of the within-industry rise in income inequality between skilled and unskilled workers between 1979 and 1988. This effect is largest in more technology-intensive industries, suggesting a complementarity between trade liberalization and skill-biased technological change. We also show that tariff liberalization in upstream industries produced a shift away from labor more broadly and towards intermediate inputs. Finally, we show that policymakers dampened the observed impact of tariffs on inequality by assigning smaller tariff reductions to industries more reliant on low-skilled labor. |
| JEL: | F13 F14 F66 |
| Date: | 2024–01 |
| URL: | https://d.repec.org/n?u=RePEc:ten:wpaper:2024-01 |
| By: | Hinh T. Dinh |
| Abstract: | President Biden's announcement of new tariffs on China, though not economically significant on its own, symbolizes the deepening decoupling of the U.S. and Chinese economies. These tariffs, supported by both major political parties, represent the latest step in a broader strategy that favors policy interventions over traditional free-market principles and aims to protect domestic workers, maintain technological leadership, and prioritize economic security. This policy brief discusses the factors behind this shift in U.S. economic policy, including the experiences from the first and second China shocks. This shift, along with China's subsequent export policy reactions, will have important implications for the trade policies of developing countries. |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:ppaper:pb28-24 |
| By: | Costas Milas (Department of Economics, University of Macedonia); Theodore Panagiotidis (University of Liverpool); Georgios Papapanagiotou (Department of Economics, University of Macedonia) |
| Abstract: | This paper uses time-varying Bayesian models to assess the impact of the shifting, and progressively more volatile (especially since the EU Referendum vote in 2016) macroeconomic landscape on Foreign Direct Investment (FDI) inflows to the UK. FDI inflows are depressed in response to higher UK-specific economic and geopolitical uncertainty. A stronger real exchange rate and a higher interest rate also have a negative effect. It benefits from lower UK corporate tax rates and higher US uncertainty, the latter creating investment opportunities in the UK. Rising economic policy uncertainty since the EU Referendum, has led to FDI losses of up to 0.5% of GDP. |
| JEL: | C11 C32 F21 F23 F30 |
| Date: | 2024–04 |
| URL: | https://d.repec.org/n?u=RePEc:mcd:mcddps:2024_04 |
| By: | Ridwan Ah Sheikh (Department of Economics, Delhi School of Economics); Sunil Kanwar (Department of Economics, Delhi School of Economics) |
| Abstract: | This paper evaluates the impact of the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) on IPR-intensive export flows. The compliance requirements or the transition period clause that countries enjoyed under the agreement means that TRIPS implementation is staggered. We employ a recent heterogeneity robust difference-in-differences research design based on the rollout of the agreement in 155 countries from 1990-2010. Utilizing various partial aggregation schemes, we summarize the treatment effect heterogeneity across different dimensions. The robustness of baseline model is tested by looking at the impact of agreement in specific industrial clusters, demonstrating increased sensitivity to intellectual property. Our summary parameters aggregated by cohort-time, event-time and calendar-time reveal: First, the aggregate treatment effect estimates suggest that TRIPS on average led to significant reduction in IPR-intensive export flows. Second, our results demonstrate significant heterogeneity both across treatment cohorts as well as across different time periods. In particular, TRIPS led to almost 36% increase in IPR-intensive export flows in early complied cohorts, while the agreement cause 38% decline in exports for the treatment cohorts that complied later. Third, the IPR-intensive exports exhibit U-shaped response to TRIPS, falling for about ten years and then rising again. Moreover, the significant positive impact of agreement based on event-study estimates kicks in with delay. Specifically, eleven years after the agreement’s initiation, export flows are 41% higher in compliant cohorts relative to the comparison group and these effects persist until 14 years after the agreement’s inception. Fourth, the conclusions based on aggregate trade flows remain valid when examining the impact of TRIPS on the composition of trade within disaggregated industry clusters. JEL Code: C21, C23, F13, F14, O34 |
| Keywords: | TRIPS, Exports, Intellectual property rights, Difference-in-differences, Treatment effects, Event study |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:cde:cdewps:351 |
| By: | Kim, Dongsoo (Korea Institute for Industrial Economics and Trade); Kim, Soo-Dong (Kora); Lim, Soyoung (Korea Institute for Industrial Economics and Trade); Kim, Kye Hwan (Korea Institute for Industrial Economics and Trade); Min, Hyeok Ki (Korea Institute for Industrial Economics and Trade); Shin, Yoon Sung (Korea Institute for Industrial Economics and Trade); Cho, Eun Kyo (Korea Institute for Industrial Economics and Trade); Park, Byungyul (Korea Institute for Industrial Economics and Trade); Choi, Jeonghwan (Korea Institute for Industrial Economics and Trade); Bing, Hyun Ji (Korea Institute for Industrial Economics and Trade); Kang, Ji Hyun (Korea Institute for Industrial Economics and Trade) |
| Abstract: | Despite a projected global growth of 3% in 2024, uncertainties cloud the economic outlook due to ongoing conflicts, upcoming elections, and rising interest rates. Korea aims to navigate these challenges by boosting exports, attracting foreign investment, and building a more independent trade network through agreements with the US, EU, Africa, and Central America. The country seeks a proactive approach to counter trade issues and establish a mutually beneficial cooperation network. |
| Keywords: | global trade; Russia-Ukraine war; Israel-Hamas conflict; India elections; US elections; Biden; Trump; EU elections; far right; protectionism; economic security; nationalism; Korea; exports; inflation |
| JEL: | F00 F01 F02 F10 F13 F21 F42 |
| Date: | 2024–03–20 |
| URL: | https://d.repec.org/n?u=RePEc:ris:kietia:2024_003 |
| By: | Lionel Fontagné; Yoto V. Yotov; Lionel Gérard Fontagné |
| Abstract: | European integration, which culminated in the completion of the Single Market, the single currency and successive enlargements, is now faced with the question of strategic autonomy. Against this backdrop, the present paper has three objectives. First, it assesses the benefits of EU membership based on new, disaggregated trade and production data and using established and cutting-edge empirical methods. Second, it evaluates the costs of strategic autonomy – implying not trading with “riskier” partners. Third, it asks whether further deepening of the Single Market can alleviate these costs. The paper shows that the gains from European integration are substantial, albeit heterogeneous across Member States and sectors, and that the cost of strategic autonomy can be offset by deeper, but comparatively more modest, integration efforts within the European Single Market. |
| Keywords: | European integration, trade costs, trade policy, risky suppliers |
| JEL: | F10 F14 F16 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11151 |
| By: | Thierry Mayer; Vincent Vicard; Pauline Wibaux |
| Abstract: | The automotive industry faces two disruptions: China’s emergence as a leading global auto exporter, and the transition from internal combustion engine (ICE) to electric vehicles (EVs). Detailed data on sales by origin/destination/model show that the automotive market is primarily local or continental, with limited sales originating from distant countries for both ICE and EV. Accordingly, foreign direct investment (FDI) is an important mode of supply for foreign markets. Insights from Japanese and Korean brands’ market penetration in the 2000s and 2010s suggest that successful models are primarily sold through local assembly; the most successful Chinese EV models in Europe are close or above the investment threshold. Examination of potential differences between EV and ICE indicates evolving comparative advantages: while EVs are not inherently more traded compared to other vehicles, China currently leads in cells and modules, but not yet in assembly. Down the value chain, the median distance between battery production and assembly is 215 km in 2022, suggesting localized sourcing in EV similar to combustion engines and larger than ICE transmissions. |
| Keywords: | Automotive industry;Electric vehicles;China;Protectionism;Foreign direct investment;Industrial policy |
| JEL: | F10 L62 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:cii:cepipb:2024-45 |
| By: | Robert Stehrer; Bernhard Dachs; Maria Yoveska |
| Abstract: | In view of the importance of the export economy for Austria this study examines the role and characteristics of Austrian exporting firms compared with non-exporting firms. Specifically, it assesses how the share of exporting firms has developed in recent years, whether exports have become more important for firms over time and to what extent exporters have an advantage over other firms (export premium). The results show that about two third of the Austrian manufacturing firms are engaged in exporting activities and indicate that – in line with existing literature - exporting firms are larger, more productive, generate higher surpluses, invest more, and spend more on environmental protection than non-exporters. Further, the results highlight that only a small number of firms account for a large share of Austrian manufacturing exports. Finally, the results point towards a mutual positive relationship between export behaviour, productivity, and R&D expenditures. |
| Keywords: | Export premium, Firm-level analysis, productivity and exporting |
| JEL: | F14 D22 |
| Date: | 2022–07 |
| URL: | https://d.repec.org/n?u=RePEc:wsr:ecbook:y:2022:m:07:i:viii-002 |
| By: | Jaime Arellano-Bover; Shmuel San |
| Abstract: | We study how job mobility, firms, and firm-ladder climbing can shape immigrants’ labor market success. Our context is the mass migration of former Soviet Union Jews to Israel during the 1990s. Once in Israel, these immigrants faced none of the legal barriers that are typically posed by migration regulations around the world, offering a unique backdrop to study undistorted immigrants’ job mobility and resulting unconstrained assimilation. Rich administrative data allows us to follow immigrants for up to three decades after arrival. Differential sorting across firms and differential pay-setting within firms both explain important shares of the initial immigrant-native wage gap and subsequent convergence dynamics. Moreover, immigrants are more mobile than natives and faster at climbing the firm ladder, even in the long term. As such, firm-to-firm mobility is a key driver of these immigrants’ long-run prosperity. Lastly, we quantify a previously undocumented job utility gap when accounting for non-wage amenities, which exacerbates immigrant-native disparities based on pay alone. |
| Keywords: | immigration, firms, job mobility, labor market assimilation |
| JEL: | J31 J61 F22 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11177 |
| By: | Saussay, Aurelien; Sato, Misato |
| Abstract: | This study examines the influence of relative energy prices on the geographical distribution of industrial investments across 41 countries. Employing a gravity model framework to analyse firms’ investment location decisions, we estimate the model using global bilateral investment flows derived from firm-level M&A data. Our findings reveal that a 10% increase in the energy price differential between two countries results in a 3.2% rise in cross-border acquisitions. This effect is most pronounced in energy-intensive industries and transactions targeting emerging economies. Furthermore, policy simulations suggest that the impact of unilateral carbon pricing on cross-border investments is modest. |
| Keywords: | FDI; mergers and aquistions; energy prices; firm location; competitiveness impacts; carbon leakage; Elsevier deal |
| JEL: | F21 H23 Q52 |
| Date: | 2024–04–23 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:123034 |
| By: | Ann M Carlos (University of Colorado Boulder United States); Erik Green (Department of Economic History, Lund University); Calumet Links (Department of Economics, Stellenbosch University); Angela Redish (University of British Columbia Vancouver Canada) |
| Abstract: | This paper examines the responses of Indigenous nations and European companies to new trading opportunities: Cree nations and the Hudson's Bay Company (HBC), and Khoe nations and the Dutch East India Company (VOC). This case study is important because of the disparate outcomes: within a few decades the Cree standard of living had increased, and Khoe had lost land and cattle. Standard histories begin with the establishment of trading posts but this elides the decades of prior intermittent contact which played an important role in the disparate outcomes in the two regions. The paper emphasizes the significance of Indigenous agency in trade. |
| Keywords: | Indigenous economics, trade, ecology, cross-continental comparison |
| JEL: | N30 N70 N71 N77 J15 Q57 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:sza:wpaper:wpapers383 |
| By: | Ina Ganguli; Jennifer R. Withrow |
| Abstract: | On February 5, 1917, the United States passed the Immigration Act of 1917, which included a test for all migrants arriving to the U.S. to prove they were literate. The Literacy Test was one of the first and few times the U.S. used a broad ‘skill-based’ immigration policy in an attempt to limit migration. We assess whether the Immigration Act had any measurable impacts on immigration to the U.S. Using a differences-in-differences approach and digitized data from Ellis Island ship manifests from directly before and after the Act’s passage and enactment, we show that the Act significantly altered selection into migration to the U.S. from Europe through Ellis Island, reducing migration from low literacy countries by 70 percent compared to arrivals from high-literacy countries. We also discuss other provisions of the Act that had the potential to influence the gender composition of arrivals. We show that women – and in particular single women – were less likely to arrive after its passage. Our analysis suggests that even during this period of lower immigration due to WWI and rising literacy levels, the 1917 Act was a consequential moment in immigration history in the United States. |
| JEL: | F22 J15 J61 N32 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32624 |
| By: | Federico S. Mandelman; Yang Yu; Francesco Zanetti; Andrei Zlate |
| Abstract: | We document a steady decline in low-skilled immigration that began with the onset of the Great Recession in 2007, which was associated with labor shortages in low-skilled service occupations and a decline in the skill premium. Falling returns to high-skilled jobs coincided with a decline in the educational attainment of native-born workers. We develop and estimate a stochastic growth model with endogenous immigration and training to account for these facts and study macroeconomic performance and welfare. Lower immigration leads to higher wages for low-skilled workers and higher consumer prices. Importantly, the decline in the skill premium discourages the training of native workers, persistently reducing aggregate productivity and welfare. Stimulus policies during the COVID-19 pandemic, amid a widespread shortage of low-skilled immigrant labor, exacerbated the rise in consumer prices and reduced welfare. We show that the 2021-2023 immigration surge helped to partially alleviate existing labor shortages and restore welfare. |
| Keywords: | immigration, skill premium, task upgrading, heterogeneous workers |
| JEL: | F16 F22 F41 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2024-46 |
| By: | Colantone, Italo; Ottaviano, Gianmarco; Stanig, Piero |
| Abstract: | We argue that our understanding of industrial policy in the presence of ‘strategic’ industries that exert positive externalities on the national economy may benefit from an extension of quantitative general equilibrium trade models making the extent and pattern of trade-induced reallocations more salient. To make these features relevant for national welfare, we introduce the notion of the ‘social footprint’ of globalisation as the result of suboptimal trade-induced structural transformation in the presence of externalities. For proof of concept, we use simple workhorse models featuring two countries and two industries (only one of which is ‘strategic’) to highlight the role of the ‘scale elasticity’ of the strategic industry and the consequences of the most common assumptions on market structure in quantitative trade analyses. |
| Keywords: | externalities; market structure; globalisation; quantitative trade models; strategic industries; trade liberalisation |
| JEL: | F11 F12 F17 F15 |
| Date: | 2023–12–13 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:124046 |
| By: | Parisa Ghasemi (University of Coimbra, Faculty of Economics); Paulino Teixeira (University of Coimbra, Centre for Business and Economics and Faculty of Economics); Carlos Carreira (University of Coimbra, Centre for Business and Economics and Faculty of Economics) |
| Abstract: | In this study, we investigate the impact of the share of the foreign labor force on the wage of native workers in Portugal between 2010 and 2019 using linked employer-employee data from Quadros de Pessoal. By leveraging job characteristics from the O*NET skill taxonomy, we create more homogeneous skill groups, enabling a precise analysis of immigration's impact on specific skill sets. The empirical analysis, focusing on occupation-experience groups, reveals a positive association between native wages and immigrant shares. In contrast, when groups are based on education-experience, the relationship appears negative. These contradictory findings suggest that the impact of immigration on native wages varies significantly depending on how labor markets are segmented. Furthermore, our analysis demonstrates a positive and statistically significant effect on native wages in high-skilled occupations, while native wages in low-skilled occupations are negatively affected due to increased competition. Our findings highlight the importance of considering occupation classification over simple education levels and suggest that diverse results in existing literature may be due to sample averaging. |
| Keywords: | Immigration, native wages, native-immigrants’ complementarities |
| JEL: | J24 J31 J61 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:gmf:papers:2024-02 |
| By: | Salla Kalin; Ilpo Kauppinen; Kaisa Kotakorpi; Jukka Pirttilä |
| Abstract: | We contribute to the literature on taxation and international mobility by estimating the impact of labour income taxation on the migration decisions of the entire working population in a high-tax source country, Finland. We find that the average domestic elasticity of migration with respect to the domestic tax rate is very small (around 0.0005). We also examine the income gradient of the semi-elasticity of migration, shown to be the key sufficient statistic in Lehmann et al. (2014). Our estimates indicate that the migration semi-elasticities are increasing for top earners, but remain small at least up to top permille of income earners. |
| Keywords: | taxation, migration |
| JEL: | J61 H31 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11165 |
| By: | Assaf Razin; Andrzej Cieslik |
| Abstract: | This essay highlights the effects of radical transformations in the liberal characteristics of the regimes on foreign direct investors. To focus on the common patterns in the effects on foreign direct investment, of liberal vs. illiberal regime change, the essay spotlights the tale of two countries: Poland and Israel. The liberalization of the Polish economy and market reforms in the late 1980s and early 1990s boosted Poland's attractiveness to international companies. However, decades-long of illiberal policies under the PiS regime has reduced Poland's appeal to foreign investors. Similarly, Israel's GNP especially the high-tech sector saw significant growth from the 1990s to the 2010s, driven by the liberalization of capital and finance surges, and the global IT boom immigration. As a more-or-less a laboratory experiment for the real-economy impact of an abrupt transition to an illiberal regime, early steps of a comprehensive judicial overhaul have disrupted Israel's growth, causing a sharp decline in foreign direct investment. |
| JEL: | F21 F40 P00 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32614 |
| By: | Emmanuel Dhyne; Amil Petrin; Valerie Smeets; Frederic Warzynski |
| Abstract: | We study how increased import competition affects the evolution of productivity in a small open economy. We use a production survey of Belgian firms where we observe quarterly firm-product data at the 8-digit level on value and quantities sold together with firm-level labor, capital, and intermediate inputs from 1997 to 2007, a period marked by a stark decline in tariffs applied to Chinese goods. We extend the methodology developed in Dhyne et al. (2022) to estimate firm-product measures of productivity. We find that a 1% increase in the import share leads to a 1.05% gain in productivity. This elasticity translates into gains from competition over the sample period exceeding 1.2 billion euros, which is over 2.5% of the average annual value of manufacturing output in Belgium. We show firms appear to be less productive the further away from their ”core” competency product. We also find that firms respond to competition by focusing more on their core products. Instrumenting import share with changes in Chinese tariffs magnifies the effect of competition as the coefficient increases tenfold moving from OLS to IV. |
| JEL: | F10 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11155 |
| By: | Anand Chopra; Ronit Mukherji |
| Abstract: | This paper illustrates the role of low-skilled immigrants' location choice as a channel through which local labour markets adjust to automation. We employ a shift-share instrumental variable approach to demonstrate that low-skilled immigrants are more mobile than low-skilled native born in response to robot exposure. Low-skilled immigrants are less likely to enter and more likely to exit from highly robot-exposed regions. Immigrants' location decisions attenuate wage losses due to robot exposure for low-skilled natives. Low-skilled native workers experience a 0.07 percentage point smaller decline in wages comparing commuting zones at the 50th and 25th percentiles of low-skilled immigrant shares. |
| Keywords: | Automation, Geographic labour mobility, Immigrants, Technology |
| JEL: | J15 J23 J31 J61 O33 R23 |
| Date: | 2024–06–25 |
| URL: | https://d.repec.org/n?u=RePEc:liv:livedp:202409 |
| By: | Pinelopi K. Goldberg; Réka Juhász; Nathan J. Lane; Giulia Lo Forte; Jeff Thurk |
| Abstract: | The resurgence of subsidies and industrial policies has raised concerns about their potential inefficiency and alignment with multilateral principles. Critics warn that such policies may divert resources to less efficient firms and provoke retaliatory measures from other countries, leading to a wasteful "subsidy race." However, subsidies for sectors with inherent cross-border externalities can have positive global effects. This paper examines these issues within the semiconductor industry: a key driver of economic growth and innovation with potentially significant learning-by-doing and strategic importance due to its dual-use applications. Our study aims to: (1) document and quantify recent industrial policies in the global semiconductor sector, (2) explore the rationale behind these policies, and (3) evaluate their economic impacts, particularly their cross-border effects, and compatibility with multilateral principles. We employ historical analysis, natural language processing, and a model-based approach to measure government support and its impacts. Our findings indicate that government support has been vital for the industry's growth, with subsidies being the primary form of support. They also highlight the importance of cross-border technology transfers through FDI, business and research collaborations, and technology licensing. China, despite significant subsidies, does not stand out as an outlier compared to other countries, given its market size. Preliminary model estimates indicate that while learning-by-doing exists, it is smaller than commonly believed, with significant international spillovers. These spillovers likely reflect cross-country technology transfers and the role of fabless clients in disseminating knowledge globally through their interactions with foundries. Such cross-border spillovers are not merely accidental but result from deliberate actions by market participants that cannot be taken for granted. Firms may choose to share knowledge across borders or restrict access to frontier technology, thereby excluding certain countries. Future research will use model estimates to simulate the quantitative implications of subsidies and to explore the dynamics of a ``subsidy race'' in the semiconductor industry. |
| JEL: | F13 F61 L63 N60 O38 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32651 |
| By: | Santeramo, Fabio G.; Jelliffe, Jeremy |
| Abstract: | After long consultations with stakeholders and parties that may be affected? , simulations of potential impacts and discussion to twist the design of the Carbon Border Adjustment Mechanism (CBAM) to be feasible, justifiable, and effective, the measure has been approved by the European Union in 2023 and has been officially started in October, for five sectors, included fertilizers as major input in agriculture. We use descriptive statistics and graphical analyses to highlight specific and relevant characteristics of target CBAM sectors for fertilizer. |
| Keywords: | Climate Change, Crop Production/Industries, International Relations/Trade, Sustainability |
| Date: | 2024–06–01 |
| URL: | https://d.repec.org/n?u=RePEc:ags:iatrcp:344137 |
| By: | Simone Maxand; Hend Sallam |
| Abstract: | We investigate the impact of immigration on public budgets using administrative data from German districts (Kreise). While previous literature suggests that the fiscal benefits of migration depend on government spending responses to immigration, the local-level effects in Germany remain relatively unexplored. Our study analyzes how immigration influences public spending, the provision of public goods, and public revenues from 2010 to 2019. Employing the post-double selection LASSO method for model identification and instrument generation, our results suggest that an increase in the foreign population proportion at the district level does not significantly affect public investment spending or collected tax revenues. Overall, along with 2011 results at the community level (Gemeinde), this research discusses the importance of distinguishing between different local levels, migration groups, and expenditure categories, when studying the gains and burdens of immigration in Germany. |
| Keywords: | immigration, size of the government, welfare state, local budgets, spatial economy, public revenues, public spending |
| JEL: | H53 I38 H70 H72 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11162 |
| By: | Giovanni Dosi; Federico Riccio; Maria Enrica Virgillito |
| Abstract: | This work assesses the double harm of Global Value Chain (GVC) integration. Firstly, we take a within-country structural change perspective and investigate how the internal structure of country production, and thus the ensuing emission profile, evolves across development phases. Assessing the structural change-emissions nexus is necessary to understand how to reconcile growth and sustainable development. Secondly, we look at the cross-country dimension, embracing how the changing geography of production affects the environment. We find evidence that the relocation of production toward developing countries via GVCs has negatively impacted worldwide emissions and document that GVCs are progressively becoming a carrier of industrial and ecological downgrading for developing countries. |
| Keywords: | Structural Change, CO2 Emissions, Global Value Chains |
| Date: | 2024–07–09 |
| URL: | https://d.repec.org/n?u=RePEc:ssa:lemwps:2024/17 |
| By: | Mohammad Reza Farzanegan; Nader Habibi |
| Abstract: | This study examines the impact of international economic sanctions, imposed on Iran due to its nuclear program, on the development of the middle class. Specifically, it investigates how the middle class in Iran would have developed in the absence of these sanctions post-2012. To address this question, we employ a synthetic control model to create a counterfactual scenario for Iran, using a weighted average of other comparable countries that mirror pre-sanction Iran, but did not experience significant international sanctions. By comparing the middle-class size of this counterfactual Iran with the actual Iran that faced major economic sanctions, our results indicate that the annual middle-class size would have been approximately 11 percentage points larger, on average, without the post-2012 sanctions. Our findings are robust across various tests, including placebo tests and synthetic difference-in-difference analyses. The latter analysis shows that the estimated average effect of sanctions on the middle-class size of Iran from 2012 to 2019 is highly statistically significant. Finally, we provide evidence on the relevance of real GDP per capita and merchandise imports as key selected channels through which sanctions negatively affect the size of the middle class. |
| Keywords: | sanctions, Iran, middle class, poverty, inequality, synthetic control method, counterfactual |
| JEL: | F51 I31 P36 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11175 |
| By: | Salvatore Carrozzo; Alessandra Venturini; Elisabetta Lodigiani |
| Abstract: | The consumption of cultural goods can play a crucial role in the social and economic integration of immigrants into their destination country. In this paper, we investigate the effect of the cultural national program, IoStudio, designed to enhance the consumption of cultural goods among upper secondary students in Italy, on post-secondary investment in education and early labor market conditions among young immigrants. Using data from a unique survey conducted by the Institute for Multiethnic Studies (ISMU) on a repre-sentative sample of the entire immigrant population in the Italian Lombardy region and employing a difference-in-differences estimator, we find that the IoStudio policy has pos-itive effects on investment in post-secondary education. Additionally, young foreigners exposed to the policy exhibit higher earnings, at least in the short run, when they enter the labour market. We claim that cultural consumption by immigrants is a relevant concern, deserving close attention in terms of increasing social capital and labour market inclusion. |
| JEL: | Z11 J61 J62 I26 |
| Date: | 2024–07–16 |
| URL: | https://d.repec.org/n?u=RePEc:cel:dpaper:69 |
| By: | Miklós Koren; Álmos Telegdy |
| Abstract: | Using a novel Hungarian dataset on firms and their Chief Executive Officers (CEOs), we estimate the impact of hiring expatriate CEOs. By examining foreign acquisitions where the new owner replaces the incumbent CEO with an expatriate or a local CEO, we address the selection into both acquisition and CEO hiring. Firms led by expatriate CEOs show 13 percent total factor productivity growth, 95 percent sales growth, and increase both exports and domestic sales. Hiring expatriate CEOs enhances firm performance in both international and domestic markets. Our findings suggest that expatriates have superior general management skills. |
| Keywords: | expatriate CEO, foreign acquisition, firm performance, Hungary |
| JEL: | F23 F61 L25 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11164 |
| By: | Munch, Jakob R. (University of Copenhagen); Olney, William W. (Williams College) |
| Abstract: | The prevalence of labor unions have declined post-WWII, and this paper examines whether globalization is a contributing factor. Offshoring jobs abroad may change the composition of domestic firms and employment and thus reduce union density. Alternatively, a firms' ability to offshore may erode the union's bargaining power, decrease the benefits of union membership, and reduce unionization rates. We test these predictions using an employer-employee matched data set covering the universe of workers and firms in Denmark (1999-2017), which allows us to measure the exogenous threat of offshoring at the firm-level and the unionization decisions of individual workers. The findings show that the threat of offshoring reduces unionization rates, even within a job-spell. This is not driven by the changing composition of firms or workers, but instead appears to be due to a decline in the union's bargaining position. Additional results confirm that the union wage premium and the rent-sharing elasticity are both smaller at offshoring firms. These results have important policy implications for the distributional effects of globalization and for the future of organized labor. |
| Keywords: | offshoring, unions, trade, globalization, collective bargaining |
| JEL: | F66 F16 J50 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17116 |
| By: | Valerie Preston; John Shields; Valerie Pruegger; Mireille Paquet; Sivakamy Thayaalan; Gabriel Eidelman; Spencer Neufeld; Kass Forman (University of Toronto) |
| Abstract: | As of June 2024, Canada’s population exceeded 41 million when including temporary foreign workers. Less than two years ago, the federal government announced that Canada would aim to welcome 500, 000 permanent residents per year by 2025, a growth in population that excluded temporary foreign workers, asylum seekers, and others. The vast majority of these new residents will reside in cities resulting in a rising demand for services to support and integrate newcomers. While many of the settlement services required fall within the purview of local government, municipalities do not enjoy any formal powers related to immigration, nor the funds to handle these increased pressures. The ninth report in the Who Does What series from the Institute on Municipal Finance and Governance (IMFG) and the Urban Policy Lab examines the role that municipalities play in immigration and their ability to fund, manage, and deliver services and implement policies to respond to new arrivals. Valerie Preston and John Shields show how non-governmental organizations and municipalities support international migrants, the complex links between them and the other orders of government, and the tensions and challenges in these relationships, using examples from Ontario. Valerie Pruegger explores the journey to get a municipal immigration policy approved by Calgary City Council, how it was subsequently implemented, and the various barriers encountered along the way. She identifies the strategies that were successful in overcoming these challenges. Mireille Paquet and Sivakamy Thayaalan examine what is needed to help municipalities handle the situation of residents who live with precarious immigration status or without any immigration status. They argue that municipalities need to have a role in the governance of immigration in Canada. |
| Keywords: | Canada, municipalities, immigration, intergovernmental relations, newcomers, precarity |
| JEL: | J15 J18 H70 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:mfg:mfgwdw:9 |