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Working Paper
Learning and the Value of Trade Relationships
This paper quantifies the value of importer-exporter relationships. We show that almost 80 percent of U.S. imports take place in pre-existing relationships, with sizable heterogeneity across countries, and show that traded quantities and survival increase as relationships age. We develop a two-country general equilibrium trade model with learning that is consistent with these facts. A model-based measure of relationship value explains survival during the 2008-09 crisis. Knowledge accumulated within long-term relationships is quantitatively important: wiping out all memory from previous ...
Working Paper
Identifying Foreign Suppliers in U.S. Import Data
Relationships between firms and their foreign suppliers are the foundation of international trade, but data limitations and reliability concerns make studying such relationships challenging. We evaluate and enhance supplier information in U.S. import data and present new facts about importer?exporter relationships. Count of foreign exporters from U.S. import data tends to exceed those from source country data, especially from China. The pattern of U.S. imports from origin countries changes substantially by tracing trade back to the supplier's location instead. Related-party relationships ...
Working Paper
\"It's Not You, It's Me\" : Breakups in U.S.-China Trade Relationships
Costs to switching suppliers can affect prices by discouraging buyer movements from high to low cost sellers. This paper uses confidential U.S. Customs data on U.S. importers and their Chinese exporters to investigate these costs. I find considerable barriers to supply chain adjustments: 45% of arm?s-length importers keep their partner, and one-third of switching importers remain in the same city. Guided by these regularities, I propose and structurally estimate a dynamic discrete exporter choice model. Cost estimates are large and heterogeneous across products. These costs matter for trade ...
Working Paper
Deindustrialization and Industry Polarization
We add to recent evidence on deindustrialization and document a new pattern: increasing industry polarization over time. We assess whether these new features of structural change can be explained by a dynamic open economy model with two primary driving forces, sector-biased productivity growth and sectoral trade integration. We calibrate the model to the same countries used to document our patterns. We find that sector-biased productivity growth is important for deindustrialization by reducing the relative price of manufacturing to services, and sectoral trade integration is important for ...
Working Paper
Structural Change and Global Trade
Services, which are less traded than goods, rose from 58 percent of world expenditure in 1970 to 79 percent in 2015. Using a Ricardian trade model incorporating endogenous structural change, we quantify how this substantial shift in consumption has affected trade. Without structural change, we find that the world trade to GDP ratio would be 15 percentage points higher by 2015, about half the boost delivered from declining trade costs. In addition, this structural change has lowered the global welfare gains from trade integration by almost 40 percent over the past four decades. Absent further ...
Working Paper
Firm Heterogeneity and the Impact of Immigration: Evidence from German Establishments
We use a detailed establishment-level dataset from Germany to document a new dimension of firm heterogeneity: large firms spend a higher share of their wage bill on immigrants than small firms. We show analytically that ignoring this heterogeneity in the immigrant share leads to biased estimates of the welfare gains from immigration. To do so, we set up and estimate a model where heterogeneous firms choose their immigrant share and then use it to quantify the welfare effects of an increase in the number of immigrants in Germany. Two new adjustment mechanisms arise under firm ...
Working Paper
Trade Liberalization and Mortality : Evidence from U.S. Counties
We investigate the impact of a large economic shock on mortality. We find that counties more exposed to a plausibly exogenous trade liberalization exhibit higher rates of suicide and related causes of death, concentrated among whites, especially white males. These trends are consistent with our finding that more-exposed counties experience relative declines in manufacturing employment, a sector in which whites and males are over-represented. We also examine other causes of death that might be related to labor market disruption and find both positive and negative relationships. More-exposed ...
Working Paper
Exporting and Frictions in Input Markets : Evidence from Chinese Data
This paper investigates the impact of international trade on input market distortions. We focus on a specific friction, binding borrowing constraints in capital markets. We propose a theoretical model where a firm's demand for capital is constrained by an initial asset allocation and past sales. While the initial distribution of assets induces misallocation if the asset endowment at more productive firms does not fully cover their demand for capital, the dependence of the borrowing constraint from past sales proxies for cross-firm differences in the cost of default, which is empirically ...
Working Paper
The Employment Consequences of Anti-Dumping Tariffs: Lessons from Brazil
Can anti-dumping tariffs increase employment? We compile data on all antidumping (AD) investigations in Brazil matching it to firm-level administrative employment information. Using difference-in-differences, we find that an AD tariff decreases imports and increases employment in the protected sector. Moreover, downstream firms decrease employment, while upstream ones are not affected. To quantify the aggregate effect of these tariffs, we build a model with international trade, input-output linkages, and labor force participation. We show that the Brazilian AD policy increased employment by ...
Working Paper
Does Exporting Improve Matching? Evidence from French Employer-Employee Data
Does opening a market to international trade affect the pattern of matching between firms and workers? This paper answers this question both theoretically and empirically in three parts. We set up a model of matching between heterogeneous workers and firms in which variation in the worker type at the firm level exists in equilibrium only because of the presence of search costs. When firms gain access to the foreign market, their revenue potential increases. When stakes are high, matching with the right worker becomes particularly important because deviations from the ideal match quickly ...