Published and Forthcoming
In Search of the Armington Elasticity (with Robert C. Feenstra, Maurice Obstfeld, and Katheryn N. Russ)
The Review of Economics and Statistics
The elasticity of substitution between goods from different countries is important for many questions in international economics, but its magnitude is subject to debate: the "macro" elasticity between home and import goods is often found to be smaller than the "micro" elasticity between foreign sources of imports. We explore estimation techniques for the macro and micro elasticities using both simulated data from a Melitz-style model, and highly disaggregate U.S. production data matched to Harmonized System trade data. We find that in up to one-half of goods there is no significant difference between the macro and micro elasticities, but in the other half of goods the macro elasticity is significantly lower than the micro elasticity, even when they are estimated at the same level of disaggregation.
Global Supply Chains, Firm Scope and Vertical Integration: Evidence from China
The Journal of Economic Geography
This paper utilizes geographic variation in Chinese processing trade and foreign ownership to evaluate the role of value chains in determining the organization of global trade. I provide evidence that the value chain position of intermediates along with the degree of substitutability across stages of the value chain provide incentives for firms to own intermediate good suppliers. Additionally, I find support for the role of firm lUnevel heterogeneity in incentivizing vertically integration of the the supply chain.
Working Papers
Intermediate Good Sourcing, Wages and Inequality: From Theory to Evidence
R&R Review of International Economics
The growth of intermediate goods and intra-firm trade makes it crucially important to understand and quantify how these trade flows affect labor. I present a model which investigates the employment and wage consequences of offshoring and outsourcing. I model the decisions regarding outsourcing and offshoring as being driven by labor market frictions. Testing the predictions of my theoretical model, I find evidence that ownership plays an important role in determining the effect of trade on domestic wages and inequality.
The Labor Market Effects of Immigration Enforcement, with Chloe East, Annie Hines, Hani Mansour and Andrea Velasquez
This paper examines the effect of changes in the supply of immigrant labor on labor market outcomes, by exploiting the implementation of the Secure Communities (SC) program, a county-based immigration enforcement measure. We use variation in the timing of the introduction of SC across counties, combined with data from the American Community Survey for 2005-2014 to implement a difference-in-difference design with geographic and time fixed effects. We find evidence that SC had a negative impact on the employment of low-skilled non-citizen workers, who are likely to be directly affected by the policy, and a negative impact on the employment of both middle to high skill citizen workers. This is the first paper to provide quasi-experimental evidence on the labor market effects of deportations on citizens across the skill distribution, and is of paramount importance given the current immigration policy debates.
U.S. Employment Reallocation and the China Shock: 25 years of Birth, Death, and Reincarnation,* with Nicholas Bloom, Kyle Handley, Andre Kurmann (New version soon)
This paper studies the effects of China’s growing importance in the global economy on the location and organization of economic activity within the U.S. during the quarter century from 1990-2015. Using micro-data from the U.S. Census Bureau we identify the effect of local exposure to import competition on all margins of reallocation within and across establishments, firms, and sectors. In addition to confirming the main finding by Autor, Dorn, and Hanson (2013) -- a significant negative effect of local exposure to the Chinese import competition on manufacturing employment -- we uncover significant firm- and establishment-level reorganization, which puts the decline in manufacturing employment in a broader context, and is important for future policy. We find that approximately one-third of the observed manufacturing job loses caused by the "China shock" are accounted for by establishments switching out of manufacturing into non-manufacturing activities, and three-fourths of manufacturing job losses occur within firms that are simultaneously expanding total non-manufacturing employment. We also find that this observed reallocation caused by the import penetration is driven by large firms, who are active and stable importers, operating within wholesale as well as professional, technical and scientific services. On net, we find that import competition results in large-scale reallocation of local economic activity, causing a simultaneous drop in manufacturing and rise in non-manufacturing employment, and a significant reduction in average earnings within the local economy.
*This project has been funded by the Ewing Marion Kauffman Foundation (Strategic Grant #20150936).
Offshoring and Skills Demand, with Peter Kuhn and Hani Mansour (new version soon)
This paper studies how offshoring-related layoff events change the mix of skills that are demanded by trade-affected firms. Our analysis relies on a novel data set which combines the universe of Trade Adjustment Assistance (TAA) petitions filed by US firms during 2010-2015 with detailed information on online job vacancies. TAA petitions allow us to precisely identify the timing of layoff events, the number of affected workers, and the type of offshoring resulting in the layoff (materials versus service). Utilizing within firm variation in the timing of filing a TAA petition, we find little evidence that TAA petitions lead to a change in the monthly number of vacancies a firm posts online. In contrast, we find that both materials and service offshoring events lead to an increase in the share of vacancies requiring soft skills (such as communication and teamwork). Service offshoring events are also associated with an increase in the demand for hard skills (such as math and problem solving).
R&R Review of International Economics
The growth of intermediate goods and intra-firm trade makes it crucially important to understand and quantify how these trade flows affect labor. I present a model which investigates the employment and wage consequences of offshoring and outsourcing. I model the decisions regarding outsourcing and offshoring as being driven by labor market frictions. Testing the predictions of my theoretical model, I find evidence that ownership plays an important role in determining the effect of trade on domestic wages and inequality.
The Labor Market Effects of Immigration Enforcement, with Chloe East, Annie Hines, Hani Mansour and Andrea Velasquez
This paper examines the effect of changes in the supply of immigrant labor on labor market outcomes, by exploiting the implementation of the Secure Communities (SC) program, a county-based immigration enforcement measure. We use variation in the timing of the introduction of SC across counties, combined with data from the American Community Survey for 2005-2014 to implement a difference-in-difference design with geographic and time fixed effects. We find evidence that SC had a negative impact on the employment of low-skilled non-citizen workers, who are likely to be directly affected by the policy, and a negative impact on the employment of both middle to high skill citizen workers. This is the first paper to provide quasi-experimental evidence on the labor market effects of deportations on citizens across the skill distribution, and is of paramount importance given the current immigration policy debates.
U.S. Employment Reallocation and the China Shock: 25 years of Birth, Death, and Reincarnation,* with Nicholas Bloom, Kyle Handley, Andre Kurmann (New version soon)
This paper studies the effects of China’s growing importance in the global economy on the location and organization of economic activity within the U.S. during the quarter century from 1990-2015. Using micro-data from the U.S. Census Bureau we identify the effect of local exposure to import competition on all margins of reallocation within and across establishments, firms, and sectors. In addition to confirming the main finding by Autor, Dorn, and Hanson (2013) -- a significant negative effect of local exposure to the Chinese import competition on manufacturing employment -- we uncover significant firm- and establishment-level reorganization, which puts the decline in manufacturing employment in a broader context, and is important for future policy. We find that approximately one-third of the observed manufacturing job loses caused by the "China shock" are accounted for by establishments switching out of manufacturing into non-manufacturing activities, and three-fourths of manufacturing job losses occur within firms that are simultaneously expanding total non-manufacturing employment. We also find that this observed reallocation caused by the import penetration is driven by large firms, who are active and stable importers, operating within wholesale as well as professional, technical and scientific services. On net, we find that import competition results in large-scale reallocation of local economic activity, causing a simultaneous drop in manufacturing and rise in non-manufacturing employment, and a significant reduction in average earnings within the local economy.
*This project has been funded by the Ewing Marion Kauffman Foundation (Strategic Grant #20150936).
Offshoring and Skills Demand, with Peter Kuhn and Hani Mansour (new version soon)
This paper studies how offshoring-related layoff events change the mix of skills that are demanded by trade-affected firms. Our analysis relies on a novel data set which combines the universe of Trade Adjustment Assistance (TAA) petitions filed by US firms during 2010-2015 with detailed information on online job vacancies. TAA petitions allow us to precisely identify the timing of layoff events, the number of affected workers, and the type of offshoring resulting in the layoff (materials versus service). Utilizing within firm variation in the timing of filing a TAA petition, we find little evidence that TAA petitions lead to a change in the monthly number of vacancies a firm posts online. In contrast, we find that both materials and service offshoring events lead to an increase in the share of vacancies requiring soft skills (such as communication and teamwork). Service offshoring events are also associated with an increase in the demand for hard skills (such as math and problem solving).