Benjamin Faber | Clausen Center

Benjamin Faber

Assistant Professor

Department of Economics

Ben Faber is assistant professor in the Economics Department at the University of California Berkeley. His research is at the intersection of international trade and economic development, broadly looking at how falling barriers to flows of trade, investment and ideas affect economic outcomes and policy choices in developing countries. Before joining UC Berkeley in 2013, he received his PhD from the London School of Economics after visiting MIT and UCLA as part of his doctoral studies.

Summary of recent papers:

Tourism and Economic Development: Evidence from Mexico's Coastline

Date: June 2016

Coauthors: Cecile Gaubert

Citation: NBER Working Papers, No. 22300

Tourism is one of the most visible and fastest growing facets of globalization in developing countries. This paper combines a rich collection of Mexican microdata with a quantitative spatial equilibrium model and a new empirical strategy to learn about the long-run economic consequences of tourism. We begin by estimating a number of reduced-form effects on local economic outcomes in today's cross-section of Mexican municipalities. To base these estimates on plausibly exogenous variation in long-term tourism exposure, we exploit geological and oceanographic variation in beach quality along the Mexican coastline to construct instrumental variables. To guide the estimation of the aggregate implications of tourism, we then write down a spatial equilibrium model of trade in goods and tourism services, and use the reduced-form moments to inform its calibration for counterfactual analysis. We find that tourism causes large and significant local economic gains relative to less touristic regions, and that these gains are in part driven by significant positive spillovers on manufacturing production. In the aggregate, however, we find that these local spillovers are largely offset by reductions in agglomeration economies among less touristic regions, so that the national gains from tourism are mainly driven by a classical market integration effect.

 

Retail Globalization and Household Welfare: Evidence from Mexico

Date: May 2016

Coauthors: David Atkin, Marco Gonzalez-Navarro

Citation: Journal of Political Economy, forthcoming

 The arrival of global retail chains in developing countries is causing a radical transformation in the way that households source their consumption. This paper draws on a new collection of Mexican microdata to estimate the effect of foreign supermarket entry on household welfare. The richness of the microdata allows us to estimate a general expression for the gains from retail FDI, and to decompose these gains into several distinct channels. We find that foreign retail entry causes large and significant welfare gains for the average household that are mainly driven by a reduction in the cost of living. About one quarter of this price index effect is due to pro-competitive effects on the prices charged by domestic stores, with the remaining three quarters due to the direct consumer gains from shopping at the new foreign stores. In contrast, we find little evidence of significant changes in average municipality-level incomes or employment. We do, however, find evidence of store exit, adverse effects on domestic store profits and reductions in the incomes of traditional retail sector workers. We also show that the gains from retail FDI are on average positive for all income groups but regressive, and quantify the opposing forces that underlie this finding. Finally, we find that the estimated gains are specific to foreign entry, rather than being driven by the entry of modern store formats more generally.