Research Interests:

International Trade in Agriculture, Manufacturing, and Services; Impacts of Trade on Labor Markets in the U.S. and abroad; Immigration; Agricultural Labor Markets.

Papers:

“Do Exporters Pay Higher Wages? Evidence from an Export Refund Policy in Chile”, World Bank Economic Review, forthcoming.

Abstract – I estimate the impact of increased export activity on plant wages in a developing country context. To avoid potential endogenous selection problems, in my empirical analysis, I take advantage of exogenous variation in exports induced by a policy experiment – an export refund system implemented in Chile in 1986. Using data from a panel survey of Chilean manufacturing establishments, I show that while this export subsidy had only a modest positive impact on industry-wide relative skilled wage, it significantly increased the plant-level relative skilled wage in medium size establishments, which are most likely to take advantage of the subsidy and enter the export market.

“The Effects of Trade with Developing Countries on the Regional Demand for Skill in the U.S.: Evidence from County Data”, Journal of Regional Science, forthcoming.

Abstract – Using county-level data from the 1980s and 1990s and a county-level trade measure that incorporates the county’s industrial mix and patterns of international trade across industries, I provide new evidence that trade with developing countries raises the demand for skill and the skill premium in the U.S. Consistent with Heckscher-Ohlin, I find that trade driven by differences in factor endowments has an economically significant impact on local labor markets. The evidence suggests that when trade with developing countries rises, counties with higher skill endowment and greater employment in industries with larger trade shares experience greater relative demand for high-skilled labor.

“The Effects of Exchange Rate Volatility on Agricultural Trade”, American Journal of Agricultural Economics 90(4) (November 2008): 1028-1043.

Abstract – I extend Cho, Sheldon, and McCorriston’s (AJAE, 2002) analysis of the effect of exchange rate volatility on agricultural trade among the G-10 countries to a broad sample of developed and developing nations. I replicate their original finding that exchange rate volatility has a large negative impact on agricultural trade between G-10 members. After controlling for agricultural export subsidies, which are correlated with exchange rate volatility, I show that the original impact declines by half. Using the extended sample, I find that the effect of exchange rate volatility is much larger for developing country exporters than for developed exporters.

“How Import Competition Affects Displaced Workers in the U.S.”, in revision.

Abstract – I use the Displaced Worker Survey and bilateral trade data to assess the impact of import competition, particularly from low-wage countries, on displaced workers’ unemployment duration and re-employment wages. These outcomes are more sensitive to imports from low-wage countries than to overall imports. In a given industry of displacement, a 10 percent increase in imports from low-wage countries results in 4.8 percent reduction in re-employment wages and 2.7 weeks increase in unemployment duration. Higher imports raise the likelihood of industry reallocation upon re-employment, leading to loss of industry-specific human capital.

“The Importance of Entry Costs in International Agricultural Markets” (with Xiaoyong Zheng), in revision.

Abstract – Theoretical models of export market dynamics imply that both entry and adjustment costs are important sources of export persistence in international markets. Motivated by this observation, we propose a Bayesian method to estimate a dynamic gravity model of agricultural trade. We extend Eaton and Tamura’s (1994) static gravity model with unknown threshold to a dynamic panel data with lagged censored dependent variable and estimate it with data on 86 trading partners from 1971 to 1997. We find that entry and adjustment costs are economically and statistically important for global trade in agriculture. In particular, our results imply that these costs are higher for consumer markets in developing countries than for consumer markets in developed nations. For individual commodities, we find that entry and adjustment costs are for Meat and Dairy than Vegetable and Fruits exports.

“The Determinants of Service Offshoring: Does Distance Matter?” (with Tom Grennes), under review.

Abstract – The importance of distance for international trade remains an unsettled issue. Innovations in information technology have reduced the costs of offshore outsourcing of services. However, empirical studies using the gravity model continue to demonstrate that distance is important for merchandise trade. We estimate a gravity model of the determinants of service trade, and after we control for the effects of information networks, the influence of distance vanishes.

“Offshore Outsourcing to Central and Eastern Europe” (with Tom Grennes), under review.

Abstract – This paper connects the literature on offshore outsourcing of services with the literature on the transition economies of Central and Eastern Europe (CEE). In comparison to Asia or South America, CEE offers cultural, educational, and locational advantages to higher income clients in Western Europe. Using data on bilateral trade in business services from the OECD, we estimate a gravity equation that includes controls for the quality of legal institutions and the strength of information networks. We find that exporters’ legal institutions and information networks are more important for services sourced from CEE, than for services sourced from other Lower-income exporters outside Europe.

“The Impact of Exchange Rate Volatility on Plant-level Investment: Evidence from Colombia” (with Asli Leblebicioglu), under review.

Abstract – We investigate the impact of exchange rate volatility on firms' investment decisions in a developing country setting. Employing plant-level panel data from the Colombian Manufacturing Census, we estimate a dynamic investment equation using the system-GMM estimator developed by Arellano and Bover (1995) and Blundell and Bond (1998). We find a robust negative impact of exchange rate volatility, constructed either using a GARCH model or a simple standard deviation measure, on plant investment. Consistent with theory, we also document that the negative effect is mitigated for establishments with higher mark-up or exports, and exacerbated for plants with larger volume of imported intermediates.

“The Effect of Legalization on Wages and Health Insurance: Evidence from the National Agricultural Worker Survey” (with Amy M. Kandilov), under review.

Abstract – We estimate the effect of legalization and the associated increase in job mobility on the wages and benefits of agricultural workers. Using data from the National Agricultural Workers Survey, we employ propensity score matching techniques to compare legal permanent residents with an appropriate control group of undocumented workers. Consistent with previous findings, we document that legalization results in a modest wage gain of about 5 percent. Further, we show that, in addition to higher wages, legalization leads to a significantly higher likelihood of receiving some other form of compensation, such as employer-sponsored health insurance or a bonus. Because previous estimates of the impact of legalization do not consider other forms of compensation, they may understate the true gains to legalization.

“Trade and Wages Revisited: The Effect of the China’s MFN Status on the Skill Premium in U.S. Manufacturing”

Abstract – I take advantage of an interesting policy experiment – the 1980 U.S. conferral of Most Favored Nation (MFN) status to China – to estimate the effect of increased imports from a less developed country on the U.S. manufacturing wage structure. Previous empirical studies find that trade has little or no effect on wages in the U.S. However, they all rely on the basic version of the factor proportions framework (Heckscher-Ohlin) and consequently only expect to find trade-related changes across industries (e.g. Berman, Bound, and Griliches, 1994). In contrast, I use this policy experiment to provide evidence that trade raises the demand for skill and the skill premium within U.S. manufacturing industries. My findings are consistent with Schott (2004), who reports that U.S. trade data supports factor proportions specialization within, as opposed to across, industries.

“Is Exporter's Labor Demand More Elastic?”

Abstract – This study focuses on one previously mostly neglected effect of foreign trade on the labor demand elasticity – the effect of exports.  I investigate the effect of exports on both the constant-output and the total labor demand elasticity.  Taking advantage from exogenous variation in export brought about by an export subsidy implemented in Chile in 1986, I find that increased exports tend to raise the magnitude of the constant-output and the total labor demand elasticities for one of either the skilled or unskilled labor in each of the seven manufacturing industries in Chile that I consider. The estimated patters are consistent with the idea that in each industry exports tend to increase the magnitude of the constant-output labor demand elasticity for one type of labor and decrease it for the other type.  The evidence also suggests that trade related changes in the total elasticity can result from trade-related changes in the substitution effect.