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on International Trade |
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Issue of 2025–06–09
twenty-six papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Dorothee Hillrichs |
| Abstract: | This paper studies how foreign demand affects product quality specialization in international trade. In a model with non-homothetic CES preferences, firms choose quality levels based on global demand conditions, and countries with better access to high-income markets host more high-end producers. As a result, they export relatively more to rich destinations, where demand for quality is stronger. Using bilateral product-level trade data, I test this prediction by examining whether countries with higher “foreign market potential”— a trade-cost-weighted measure of access to rich consumers — export disproportionately more to higher-income destinations. A 10 percent increase in market potential raises the income elasticity of exports by 2.7 percentage points — three times the effect of domestic income. The findings highlight the role of economic integration across development levels in shaping specialization patterns. |
| Keywords: | market access, home market effects, non-homothetic preferences, quality |
| JEL: | F14 R12 O19 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11906 |
| By: | James Anderson (Boston College); Yoto Yotov (School of Economics, Drexel University) |
| Abstract: | U.S. President Trump's emphasis on 'tariff reciprocity' has focused public attention on relative height of tariffs as a measure of fairness in trade relations. The import weighted average tariff subsequently used by USTR to rank how protectionist are trading partners is atheoretic and misleading for this purpose. We propose and implement a theory-consistent tariff index that combines thousands of tariff rates into an import volume equivalent uniform tariff. The index: (i) is consistent with the WTO principle that trade relations should aim at reciprocal exchange of market access, and (ii) decomposes neatly into each country's buyer and seller incidence of tariffs. |
| Keywords: | Reciprocal Tariffs, Trade Policy, Gravity Theory, Tariff Incidence |
| JEL: | F13 F14 F16 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:drx:wpaper:202526 |
| By: | Funke, Michael; Wende, Adrian |
| Abstract: | Following Russia's invasion of Ukraine in February 2022, the US, EU, and likeminded countries swiftly imposed an expanded set of primary and secondary export restrictions on Russia. This paper assesses the effectiveness of those measures and their ongoing refinement and modification over time using a calibrated three-country dynamic general equilibrium trade model with heterogeneous firm productivities. The modeling set-up comprises a rich specification of export ban loopholes and workarounds, as well as subsequent countermeasures such as re-exports, ghost trade, and secondary extraterritorial export bans. The numerical model evaluations and the numerous policy counterfactuals highlight the challenges of export ban evasion and offer insights for effective export ban designs in the future. We show that targeted secondary extraterritorial export bans have proven an impactful policy tool in diminishing Russia's imports of critical technologies. |
| Keywords: | Russia, export bans, sanctions evasion, quantitative trade model |
| JEL: | F12 F13 F51 H56 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofitp:318192 |
| By: | Chad P. Bown (Peterson Institute for International Economics) |
| Abstract: | Fear that a foreign government will impose export restrictions that imperil another country's economic and national security has driven part of the recent turn to industrial policy and the increased use of tariffs. Countries now worry about disruption to their access not only to energy but also to critical minerals, semiconductors, medical supplies, and other essential goods. Modern use of industrial and trade policy is thus often an attempt to move supply chains in the short term and to sustain them in those new places over the long term, in order to reduce national vulnerability to disruptions caused by export restrictions. However, achieving even modest forms of international cooperation on trade and industrial policy between countries seeking to improve their collective economic security will also require that these same countries take on new commitments to discipline their own use of export restrictions toward each other. |
| Keywords: | export restrictions, economic security, industrial policy, tariffs |
| JEL: | F13 L52 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:iie:wpaper:wp25-11 |
| By: | Bosker, M.; Haasbroek, M. |
| Abstract: | We use detailed historical data on India’s domestic infrastructure to show how its high domestic transport costs have conditioned the local labour market consequences of its drastic import tariff liberalization in the early 1990s. We find that districts located farther away from the country’s main international gateways are better shielded from the resulting increased foreign import competition: their non-agricultural employment falls less than in otherwise similarly exposed districts located closer to India’s major ports. At the same time, they also benefit less from improved access to foreign intermediates: non-agricultural employment increases less than in districts with a similar input-output structure but located closer to the country’s main ports. These employment responses also vary across firms of different sizes: employment in small to medium sized firms is hit hardest by increased import competition, whereas employment in medium to large firms benefits most from better access to foreign intermediates. This difference between small and large firms is also most pronounced in districts best-connected to India’s major ports. |
| Keywords: | Words Gains from Trade, Domestic Infrastructure, Local Labour Demand, India |
| JEL: | F14 F15 R11 |
| Date: | 2025–04–29 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camjip:2512 |
| By: | Sebastien Bradley (School of Economics, Drexel University); Javier Florez (Vienna University of Economics and Business); Mario Larch (University of Bayreuth); Yoto Yotov (School of Economics, Drexel University) |
| Abstract: | This paper introduces the Granular Trade and Production Activities (GRANTPA) database, which covers international trade flows for 3, 124 products and 247 countries over the period 1995-2019 as well as domestic trade flows and production data for the same number of products and years for a subset of 35 European economies. The original data sources that we employ are Eurostat's Comext and Prodcom databases. A gravity application delivers a large set of product-level 'home bias' estimates, which cannot be obtained without domestic trade flows. The average estimates on the standard gravity variables in our model (e.g., distance) are comparable to those from the related literature. However, our disaggregated estimates are very heterogeneous across products, thus highlighting the importance of our new database. |
| Keywords: | Gravity Data, Structural Gravity, Domestic Trade Flows, Disaggregated Gravity Estimates, Home Bias Estimates |
| JEL: | C81 F13 F14 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:drx:wpaper:202527 |
| By: | James Giesecke; Robert Waschik |
| Abstract: | This paper examines the economic impacts of U.S. tariff increases announced over March-April 2025 using GTAP-FIN, a dynamic global general equilibrium model. We simulate six scenarios, comprised of the product of three retaliation and fiscal cases (i. U.S. tariff increases without retaliation; ii. retaliation by all trading partners except Australia, Japan, and South Korea; and, iii. retaliation coupled with U.S. fiscal consolidation via tariff revenue) and two U.S. tariff policy cases (i. without the U.S.' "reciprocal" tariff package, and, ii. with the "reciprocal" package). Economic impacts are larger in the three scenarios that include the U.S.' "reciprocal" tariff package. Across all scenarios, U.S. real GDP falls, driven by deep short-run employment losses, long-run capital stock contractions, and persistent allocative efficiency losses. In the no retaliation scenarios, improved U.S. terms of trade buoy U.S. real consumption outcomes relative to the contractions in real GDP. However, this benefit is reversed under retaliation, which lowers U.S. export prices and consumption. Fiscal consolidation amplifies U.S. consumption losses but mitigates investment declines. Australia is modestly affected, benefiting from improved terms of trade and investment in the retaliation scenarios. For China (PRC), heavy tariff exposure results in sustained terms of trade and consumption losses, although outcomes improve marginally with U.S. fiscal consolidation. Globally, regions most exposed to U.S. tariffs see the sharpest consumption declines, particularly under the no retaliation scenario. The analysis does not capture the heightened investor uncertainty arising from the unclear policy rationale behind the tariffs, suggesting that adverse economic impacts may exceed those estimated in this paper. |
| Keywords: | U S tariffs, Trump tariffs, "Reciprocal" tariffs, "Liberation Day" tariffs, retaliation |
| JEL: | F13 F47 C68 D58 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cop:wpaper:g-355 |
| By: | Mark A. Aguiar; Manuel Amador; Doireann Fitzgerald |
| Abstract: | This note addresses whether and when a trade war that imposes balanced trade (or even zero trade) can be consistent with initial non-zero net foreign asset positions. Using a bilateral trade model, we exploit insights from the classic literature on the Transfer Problem to characterize when gross asset or liability positions and tariff policies generate an endogenous terms-of-trade effect that ensures the value of assets and liabilities balance. As long as gross positions denominated in different goods differ in sign, there exists a continuum of bilateral tariff policies that ensure balanced trade and that satisfy the contractual financial obligations. If the new terms-of-trade do not reverse the initial direction of trade, balanced trade is consistent with non-zero exports and imports. In general, high enough bilateral tariffs lead to an autarkic outcome where no trade occurs and the net foreign asset positions rebalance to zero. |
| JEL: | F1 F13 F30 F32 F40 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33743 |
| By: | Daniel Teeter |
| Abstract: | I estimate the effects of two Canadian internal trade liberalizations on plant-level productivity, markups, and exports. In particular, I examine the New West Partnership and Trade Agreement (NWPTA) and the Trade and Cooperation Agreement (TCA), both of which sought to reduce or remove prohibitive, technical and administrative barriers to trade across provinces. Employing a control function approach, I use Canadian manufacturing data to estimate plant-level total factor productivity and markups for 2004-2012. Then, using difference-in-differences methods, I find that the NWPTA increased the likelihood that a plant exports interprovincially, increased the share of output that plants sell to other provinces, increased plant-level total factor productivity but had no significant impact on plant-level markups. The agreement raised the average plant's productivity by 1.97 percent across all post-treatment years. In contrast, the TCA had no significant impact on plant-level productivity or export behavior, but was associated with a a small increase in markups. The NWPTA has shown significant positive effects on plant performance compared to the TCA, which has significant implications for the design of internal trade agreements. Specifically, the NWPTA's negative-list approach, in contrast to the TCA's positive-list, resulted in broader coverage. Moreover, the NWPTA achieved greater progress in mutually recognizing worker certifications and business registration, as well as in harmonizing business standards between provinces, making it a more effective agreement overall. |
| Keywords: | Inter-regional trade barriers, Trade agreements, Productivity, Markups, Canada |
| JEL: | F13 F14 L11 L38 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:qed:wpaper:1522 |
| By: | Hoyos, Mateo (Center for Research and Teaching in Economics); Stellian, Rémi |
| Abstract: | Quantitative trade models predict that trade elasticities vary with comparative advantages, but empirical evidence remains scarce. We provide causal estimates of this relationship by exploiting a quasi-experimental bilateral trade agreement between Colombia and the United States. Using a local projections difference-in-differences approach, extended with state-dependent local projections to account for heterogeneity arising from comparative advantages, we estimate trade elasticities at different horizons. We find that the average short-run trade elasticity is around 1.5, and converges to approximately 4 after seven years. These elasticities increase with comparative advantages: a move from the 25th to 75th percentile in comparative advantages is associated with a 2-percentage-point increase in the long-run elasticity. To measure comparative advantages, we construct a new Revealed Comparative Advantage (RCA) index -- the system bilateral RCA index -- that exploits trade flows across multiple trade partners while preserving the ability to compare Colombia with a specific trade partner regarding their respective comparative advantages. Our findings suggest that comparative advantage shapes the responsiveness of trade flows to policy changes, which has implications for trade theory and quantitative trade models. |
| Date: | 2025–05–09 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:tr6e3_v1 |
| By: | Simola, Heli |
| Abstract: | This note discusses recent developments in economic relations between Russia and China. China has become an essential economic partner for Russia since the invasion of Ukraine. Cut off from most Western economies, Russia today is heavily dependent on trade with China and actively pursues greater cooperation with China. Yet new Chinese investment in Russia remains scarce. Indeed, foreign investment flows into Russia overall have collapsed and trends in Chinese investment are hardly better. |
| Keywords: | Russia, China, trade, investment |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofitb:318191 |
| By: | Oleg Itskhoki; Dmitry Mukhin |
| Abstract: | What is the optimal macroeconomic tariff when trade is imbalanced and the policy objectives go beyond social welfare and also include fiscal revenues, increasing the number of manufacturing jobs, and closing a trade deficit? We study these questions in an environment which allows for long-run bilateral and aggregate trade deficits that reflect the country’s net foreign asset position and differential returns on foreign assets and liabilities (the “exorbitant privilege”). Only in special cases does the optimal tariff emerge as an increasing function of a trade deficit and for reasons unrelated to trade competitiveness. Instead, the planner trades off the conventional benefits of improved terms of trade with the costs from negative valuation effects on the country’s gross financial position. In our model calibrated to the United States, its large external dollar liabilities reduce the optimal tariff three-fold, from 34% to 9%, and act as an effective hedge for its trade partners against a trade war. In contrast to the expenditure switching logic and Lerner symmetry, closing the trade imbalance calls for an appreciation of the dollar to a level that depends solely on the US external financial position, and not on trade shares or trade elasticities, and can be achieved by means of an import tariff or an export subsidy. Alternatively, financial and trade rebalancing may happen if a tariff war results in the loss of privilege and the associated dollar depreciation. |
| JEL: | F13 F31 F4 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33839 |
| By: | David Jacks (National University of Singapore); Kevin O’Rourke (Sciences Po); Alan Taylor (Columbia University); Yoto Yotov (School of Economics, Drexel University) |
| Abstract: | We introduce a new dataset on British exports at the bilateral, commodity-level from 1700 to 1899. We then pit two primary determinants of bilateral trade against one another: the trade-diminishing effects of distance versus the trade-enhancing effects of the British Empire. We find that the impact of gravity fell by a factor of roughly three between the 1780s and 1850s. The impact of empire on British exports was extremely large throughout, but the impact of 18th century mercantilism was much higher than that of empire in the liberal late 19th century. |
| Keywords: | Long run historical data, distance, empire, gravity, international trade |
| JEL: | F10 N70 N74 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:drx:wpaper:202525 |
| By: | Stéphane Auray; Michael B. Devereux; Aurélien Eyquem |
| Abstract: | We quantify the macroeconomic effects of the tariff measures announced (but not entirely implemented yet) on Liberation Day (April 2nd, 2025) through the lens of a New-Keynesian two-country model calibrated to the US and the rest of the world. We study both a unilateral 10pp tariff increase and a global trade war scenario with retalia- tory tariffs of a similar magnitude. In either case, tariffs are always sharply contractionary for US GDP, increasing inflation and widening the trade deficit. Measured in welfare terms a unilateral tariff generates gains for the US due to a large terms of trade appreciation, but these US welfare gains vanish with global retaliation. Three features of the model are critical in the evaluation of the tariff impact - the asymmetry in size and openness between the US and the rest of the world, the endogenous response of monetary policy to the inflationary effects of tariffs, and the importance of trade in intermediate goods for the scale of the global response to a tariff shock. |
| JEL: | F30 F40 F41 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33739 |
| By: | Antonia Kurz; Stela Rubínová |
| Abstract: | This study examines how policies affecting the cost of using fossil fuels in production influence comparative advantage in the industrial sector. Firstly, we use a fixed-effects gravity model to estimate the export capabilities that determine comparative advantage. Subsequently, using data on direct (carbon taxes, ETS permit prices) and indirect (fossil fuel excise taxes and subsidies) carbon pricing instruments for 45 economies from 2010 to 2018, we estimate that a 10% increase in carbon price is associated with a decline in export capability in the most carbon-intensive industry by 0.3% to 0.7%. We find empirical support for competitiveness spillovers to domestic downstream industries. Overall, changes in carbon pricing explain up to 1.2% of the variation in export capabilities over time. We illustrate the potential impact of fossil fuel subsidies removal by comparing independent action to global coordination, concluding that coordinated efforts can reduce the adverse effects on comparative advantage. |
| Keywords: | Carbon Pricing, Fossil Fuel Subsidies, Fossil Fuel Taxes, Comparative Advantage, Competitiveness |
| JEL: | F18 Q48 Q56 Q58 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2121 |
| By: | Broner, Fernando; Martin, Alberto; Meyer, Josefin; Trebesch, Christoph; Zhou Wu, Jiaxian |
| Abstract: | This article explores the interplay between economic hegemony and political alignment. Using theoretical and empirical insights from Broner et al. (2024), we posit that hegemonic states, such as the U.S., foster political alignment, which enhances globalization. We use UN voting data to proxy for international alignment and show that hegemons induce alignment. This data has shortcomings, however. UN voting only covers the post-WWII period, refers to a narrow set of issues, and displays little time variation. As for military alliances, they were not widely used before the mid-20th century. We propose an alternative measure of alignment based on international treaties. |
| Keywords: | Hegemon, globalization, trade integration, international treaties, alignment, cooperation, multipolar world |
| JEL: | F4 F1 F3 P00 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkwp:318194 |
| By: | Mitsuyo ANDO; Kazunobu HAYAKAWA; Fukunari KIMURA; Kenta YAMANOUCHI |
| Abstract: | This study empirically investigates how the US–China trade war affected sales to North America (i.e., Canada and the US) by Japanese manufacturing firms and their overseas affiliates between 2014 and 2021. Our findings are summarized as follows. All major sales channels to North America—except for sales by affiliates in Mexico, who enjoyed a positive trade diversion effect—were not significantly affected by US tariffs against China, on average. This includes sales by affiliates in the US and China. However, these effects are heterogeneous, depending on whether affiliates served as the main production bases for the North American market in their respective firms. We found such heterogeneity in affiliates in the US, ASEAN, and Mexico, as well as in firms located in Japan. For example, affiliates in ASEAN experienced a positive trade diversion effect when they were the main production bases. Our results suggest that Japanese manufacturing firms did not respond significantly to tariff changes during the Trump 1.0 period, with only minor quantitative changes and heterogeneous effects on sales to North America. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25046 |
| By: | Hinz, Julian; Méjean, Isabelle; Schularick, Moritz |
| Abstract: | - Using the KITE model suite, we study the economic costs of the Trump tariff policy for Europe, and analyze the potential for trade diversion from China. - If the current tariff regime stays in place, trade between the U.S. and China would fall dramatically, hurting mainly the U.S. and the Chinese economies. The direct economic impact for Europe appears limited. - The expected rerouting of Chinese and U.S. exports to third countries is likely to intensify competition between European and Chinese producers in key markets. European consumers stand to benefit from lower prices. |
| Abstract: | - Mit dem KITE-Modell analysieren wir die wirtschaftlichen Kosten der Trump'schen Zollpolitik für Europa und untersuchen das Potenzial für Handelsumlenkungen aus China. - Sollte das aktuelle Zollregime bestehen bleiben, würde der Handel zwischen den USA und China drastisch zurückgehen - mit negativen Folgen vor allem für die US-amerikanische und chinesische Wirtschaft. Die direkten wirtschaftlichen Auswirkungen auf Europa scheinen begrenzt zu sein. - Die erwartete Umlenkung chinesischer und US-amerikanischer Exporte in Drittländer dürfte den Wettbewerb zwischen europäischen und chinesischen Produzenten auf wichtigen Märkten verschärfen. Europäische Verbraucherinnen und Verbraucher könnten von niedrigeren Preisen profitieren. |
| Keywords: | Tariffs, trade policy, Zölle, Handelspolitik |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkpb:317795 |
| By: | Giovanni Cerulli; Francesca Micocci; Armando Rungi |
| Abstract: | This paper investigates the causal effect of export intensity on productivity and other firm-level outcomes with a dose-response function. After positing that export intensity acts as a continuous treatment, we investigate counterfactual productivity levels in a quasi-experimental setting. For our purpose, we exploit a control group of non-temporary exporters that have already sustained the fixed costs of reaching foreign markets, thus controlling for self-selection into exporting. Our findings reveal a non-linear relationship between export intensity and productivity, with small albeit statistically significant benefits ranging from 0.1% to 0.6% per year only after exports reach 60% of total revenues. After we look at sales, variable costs, capital intensity, and the propensity to filing patents, we show that, before the 60% threshold, economies of scale and capital adjustment offset each other and induce, on average, a minimal albeit statistically significant loss in productivity of about 0.01% per year. Crucially, we find that heterogeneous export intensity is associated with the firm's position on the technological frontier, as the propensity to file a patent increases when export intensity ranges in 8%-60% with a peak at 40%. The latest finding further highlights that learning-by-exporting is linked to the building of absorptive capacity. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.03328 |
| By: | Amal, Nair; Sabyasachi, Tripathi |
| Abstract: | Geopolitical risks affect global economies, particularly the services trade, which makes up 20% of total trade. Understanding these risks is key because they can impact inflation, GDP growth, the financial sector, and supply chains. The aim of the research is to examine the worldwide pattern of geopolitical risk and its significance on the trade of services, to measure how much global disputes and risk, as explained in the GPR Index, impact service trade, and to know how strong a regulatory system helps to mitigate the impacts of such threats. The Pseudo-Poisson Maximum Likelihood is used in the study to assess the adverse impact of geopolitical risks on international service trade using a panel dataset comprising 44 countries from 2011 to 2021. The study finds a negative effect of geopolitical factors on service trade and further finds that an effective regulatory system can reduce the negative impact of such geopolitical disruptions. The results may assist policymakers in gauging the economic cost of geopolitical risk and in designing policies to neutralise its disruptive potential. |
| Keywords: | Geopolitical Risk, Service trade, PPML, Regulatory Quality |
| JEL: | F1 F13 F63 |
| Date: | 2025–04–10 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124670 |
| By: | Mr. JaeBin Ahn; Brandon Tan |
| Abstract: | This paper develops a new multi-country and multi-sector general equilibrium trade model to analyze extent to which the diversification of sources of imports mitigates the impact of adverse trade shocks. The model incorporates trade network rigidities arising from frictions in goods, labor, and local factor markets. Because countries cannot immediately reconfigure supply chains in response to shocks, supply chain diversification can potentially improve resilience, at the cost of efficiency. Quantifying the resilience-efficiency trade-off suggests that diversifying the sources of targeted imports—those more exposed to shocks, positioned upstream in the supply chain, and subject to greater rigidities—can enhance expected welfare when the probability of a large trade shock is sufficiently high. |
| Keywords: | Trade; Supply Chains; Diversification |
| Date: | 2025–05–23 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/102 |
| By: | Yueling Huang; Sandra Baquie; Ms. Florence Jaumotte; Jaden Kim; Yucheng Lu; Rafael Machado Parente; Samuel Pienknagura |
| Abstract: | Industrial policies (IPs) are on the rise. The most common motive for pursuing IPs is to boost strategic competitiveness of the targeted products. Leveraging a novel database of industrial policies and using the local projection difference-in-differences approach, this paper examines the dynamic relationship between IPs and trade competitiveness. Our results point to a nuanced picture. On average, products targeted by IPs experience a larger increase in competitiveness than non-targeted ones. However, there is substantial heterogeneity across different types of products and policy instruments. The average effect is driven by initially competitive products. Turning to policy instruments, domestic subsidies are associated with a temporary improvement in trade competitiveness in the short term, whereas export incentives are linked to medium-term improvements in competitiveness. Finally, we focus on three widely discussed value chains–solar photo-voltaic, wind turbines, and electric vehicles–and present suggestive evidence that IPs can have spillover effects on non-targeted products through value chain linkages. Our findings for these three value chains suggest that IPs targeting upstream products are associated with larger improvements in the RCA of products using these upstream products relative to IPs targeting products at the same value chain stage. |
| Keywords: | Industrial policies; trade; revealed comparative advantage; domestic subsidies; export incentives; local projection difference-in-differences |
| Date: | 2025–05–23 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/098 |
| By: | Autor, David H (Massachusetts Institute of Technology); Dorn, David; Hanson, Gordon H.; Jones, Maggie R.; Setzler, Bradley |
| Abstract: | This chapter analyzes the distinct adjustment paths of U.S. labor markets (places) and U.S. workers (people) to increased Chinese import competition during the 2000s. Using comprehensive register data for 2000–2019, we document that employment levels more than fully rebound in trade-exposed places after 2010, while employment-to-population ratios remain depressed and manufacturing employment further atrophies. The adjustment of places to trade shocks is generational: affected areas recover primarily by adding workers to non-manufacturing who were below working age when the shock occurred. Entrants are disproportionately native-born Hispanics, foreign-born immigrants, women, and the college-educated, who find employment in relatively low-wage service sectors such as medical services, education, retail, and hospitality. Using the panel structure of the employer-employee data, we decompose changes in the employment composition of places into trade-induced shifts in the gross flows of people across sectors, locations, and non-employment status. Contrary to standard models, trade shocks reduce geographic mobility, with both in- and out-migration remaining depressed through 2019. The employment recovery stems almost entirely from young adults and foreign-born immigrants taking their first U.S. jobs in affected areas, with minimal contributions from cross-sector transitions of former manufacturing workers. Although worker inflows into non-manufacturing more than fully offset manufacturing employment losses in trade-exposed locations after 2010, incumbent workers neither fully recover earnings losses nor predominantly exit the labor market, but rather age in place as communities undergo rapid demographic and industrial transitions. (Stone Center on Socio-Economic Inequality Working Paper) |
| Date: | 2025–05–09 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:7rfae_v1 |
| By: | Haitao CHENG; Jota ISHIKAWA; Nori TARUI |
| Abstract: | As consumers become more environment-conscious, firms enhance their corporate environ- mental responsibility (CER) practices, such as adopting greener technologies, producing environment- friendly goods (i.e., CER goods) and capturing the price premium associated with environmental quality. Existing studies on the CER goods market adopt a closed-economy framework because CER verification and certification have traditionally been conducted locally. However, as CER certification becomes globally accessible, it is crucial to examine how firms from different countries compete in the CER goods market. We apply a North-South trade model to analyze the effects of stricter CER standards, trade liberalization, and stronger environmental awareness on firms’ CER adoption decisions under two scenarios: CER is recognized only in the North, and CER is recognized in both North and South. Our findings indicate that both stricter CER standards and greater environmental awareness encourage firms to adopt CER, regardless of the scope of CER recognition. In contrast, the impact of trade liberalization depends on whether CER is recognized in the South. When CER is recognized only in the North, trade liberalization promotes CER adoption. However, when it is recognized in both North and South, trade liberalization discourages CER adoption. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25043 |
| By: | Narayana R. Kocherlakota |
| Abstract: | A classic result in trade theory is that it is socially optimal to set the tariff on a good equal to the inverse of the elasticity of its foreign supply. However, this result is based on the assumption that the government can use lump-sum taxes. The paper considers a simple open representative agent economy and characterizes second-best tariffs when the government's only non-tariff source of revenue is linear labor income taxation. If public spending needs are sufficiently large, and import demand is more (less) income-elastic than non-import demand, then the second-best tariff is lower (higher) than the standard optimal tariff. |
| JEL: | E60 F10 H21 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33759 |
| By: | Tobias Böhm; Antonia Hohmann; Roxanne Raabe; Nadine Riedel |
| Abstract: | A broad empirical literature examines the impact of corporate taxes on firms' investment, location, and tax avoidance behaviour. Other corporate adjustment margins have received little attention. In this paper, we use administrative customs and tax return data from South Africa to demonstrate that corporate taxes influence firms' export performance and their competitiveness in international product markets. |
| Keywords: | Corporate tax, Exports, Competition, Emerging markets, Commercial policy |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-38 |