by ClausenCenter | May 7, 2019 | by Chaewon Baek & Todd Messer, Fellowship, International Trade & Development, Research
by Chaewon Baek & Todd Messer
Many studies in international trade and macroeconomics typically assume that all firms produce only a single product. However, as emphasized by Hottman et al. (2016), multi-product firms actually account for a significant portion of sales and tend to be large. This project aims to investigate the implications of relaxing the assumption of single-product firms. In particular, we examine the importance of product scope in explaining how markups are determined and distributed across firms. First, theoretically, we argue that the definition of a firm-level markup is no longer obvious when one relaxes the assumption of single-product firms. Markups can then vary due to how product scope affects pricing decisions by product. Second, we test the theory in the data by matching bar code level sales to firm production data in order to estimate how markups are related to product scope. Our results have important implications in explaining declining competition since the 1980s and patterns of international trade.
by ClausenCenter | May 7, 2019 | by Roman Zarate, Fellowship, International Trade & Development, Research
by Roman Zarate
This paper assesses the impact of urban transit improvements on labor allocation between informal and formal firms in Mexico City. I exploit the construction of new subway lines and a Bus Rapid Transit (BRT) system to study the relationship between commuting costs and informality rates. An important characteristic of labor markets in developing countries is the presence of informal, household-run businesses that employ more than 60% of the total workforce, and are substantially less productive than formal firms. This study explores a new mechanism that can explain the prevalence of informal workers: the high commuting costs within cities. In the second part, I develop a quantitative urban model to measure the welfare effects of these improvements accounting for this reallocation across sectors and estimate optimal policies to attract more workers to formal firms.
by ClausenCenter | May 7, 2019 | by Isabela Manelici & Jose-P. Vasquez, Fellowship, International Trade & Development, Research
by Isabela Manelici & Jose P. Vasquez
This project studies the impact of the entry of multinational corporations (MNCs) on worker outcomes using administrative data from Costa Rica. Policy makers from developed and developing countries alike and at all levels of government compete for the attraction of superstar firms (typically MNCs) through large economic incentives. In return, they expect an improvement in the labor market conditions of their jurisdiction. Despite the pervasiveness of such incentives, there is relatively little worker-level evidence on the impact of MNCs on the labor market and, in particular, on the distribution of labor earnings. Our project would contribute to the literature by providing evidence on who are the winners, the losers, and how the impacts of MNC entry are distributed across different worker groups (by education, occupation, initial position in the income distribution etc.).
by ClausenCenter | May 7, 2019 | Brett Green & Catherine Wolfram, Grant, International Trade & Development, Research
by Paul Gertler, Brett Green, Catherine Wolfram
The proliferation of mobile technologies and digital payments systems have the potential to radically change the credit market landscape in developing economies. In this project we will explore how a combination of these recent advances have facilitated an innovative fi nancial contract that utilizes a new form of collateral, which is designed to enhance technology adoption and access to collateralized borrowing the developing world. We will then explore the extent to which this collateral can be \re-used” to provide poor households with a ordable and recurrent access to credit markets.
by ClausenCenter | May 7, 2019 | by Cecile Gaubert, Grant, International Trade & Development, Research
by Cecile Gaubert, Pat Kline and Danny Yagan.
Place-based redistribution is ubiquitous but has traditionally enjoyed little support among economists. We study a class of spatial equilibrium models highlighting the equity-efficiency tradeoffs that arise when taxes and transfers are indexed to location. Extending classic results on indirect taxation (Atkinson and Stiglitz 1976; Saez 2002), we establish conditions under which transfers from one region to another are welfare improving, even in the presence of an optimal place-blind income tax that already redistributes across worker types. The case for indexing transfers to place is strengthened when preferences for locations are heterogeneous across worker types, but it is dampened by heterogeneity in the productivity of locations. A calibration estimates the potential size of optimal place-based redistribution in the United States.
