Published and Forthcoming Works
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---the Armington elasticity---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 investigate these two elasticities in a model using a nested CES preference structure. 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
Journal of Economic Geography
The goal of this paper is to deepen our understanding of the organization of the global value chain by investigating the evolution of processing trade in China from 1997-2013, during which time China entered the WTO and surpassed the U.S. to become the world's largest exporter. 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 level heterogeneity in incentivizing vertically integration of the the supply chain.
Intermediate Good Sourcing, Wages and Inequality: From Theory to Evidence [online appendix]
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 effects of reducing the supply of low-skilled immigrant workers on the labor market outcomes of domestic workers. We use temporal and geographic variation in the introduction of Secure Communities (SC), a county-based immigration enforcement policy, combined with data over 2005-2014 from the American Community Survey to estimate a difference-in-difference model 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. Importantly, we also find that SC negatively impacted the employment of citizens working in middle to high-skill occupations. This is the first paper to provide quasi-experimental evidence on the labor market effects of immigration enforcement policies on citizens across the occupational skill distribution, which 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)
We study the effects of China’s growing importance in global trade on U.S. employment during the quarter century from 1990-2015. Using microdata from the U.S. Census Bureau we decompose employment growth into job creation and destruction from entering, exiting and continuing establishments within local labor markets. First, our analysis confirms the main finding by Autor, Dorn and Hanson (2013) of a negative impact of the China shock on manufacturing employment. But we also find strong evidence of positive employment effects and readjustment towards non-manufacturing sectors. Second, a large share of the manufacturing job losses is accounted for by establishments switching out of manufacturing into non-manufacturing activities and, more generally, firms simultaneously contracting manufacturing employment and expanding non-manufacturing employment. This reallocation, which is driven by large firms and occurs primarily in wholesale as well as professional, technical and scientific services, explains a substantial part of the simultaneous drop in manufacturing and rise in non-manufacturing employment. Third, we document a large increase in labor market turbulence in response to the China shock, with job reallocation rates surging in response to Chinese import penetration as local labor markets transform and adjust.
*This project has been funded by the Ewing Marion Kauffman Foundation (Strategic Grant #20150936) and has received approval from the CES and IRS.
Offshoring and Demand for Skills (with Peter Kuhn and Hani Mansour)
Utilizing a novel data set containing the near-universe of online job postings in the U.S. for the period 2007-2015, we investigate how the demand for labor by U.S. firms adjusts to offshoring. Although previous research has documented that offshoring is an important contributor to stagnating middle-class earnings in the U.S. and the polarization of employment, it is unclear through which mechanisms offshoring changes employment and wages, and exactly which skills are made redundant or scarce by offshoring. Most importantly we will be able to provide answers to the following questions: i) how does offshoring affect the flow of new hires? ii) how does offshoring change the detailed demand for skills –where skills are measured by job titles and qualifications requested in job ads-- and iii) how do the answers to (i) and (ii) vary across industries, firm attributes, locations and the business cycle?
Works in Progress
Globalization and Labor Market Dynamics
This paper establishes the causal link between the rise of offshoring and the decline of labor market dynamics in the U.S. of the past two decades. We find that offshoring has played a significant role in decreasing reallocation rates in the U.S. while simultaneously increasing these rates in developing countries with whom we engage in intermediates good trade. Utilizing identification techniques developed by the literature studying the labor market effects of increased import competition (e.g. Acemoglu et al., 2015) we identify the causal impact of increases import penetration of intermediate goods from China on labor markets fluidity in the United States in downstream industries. We find that industries that are more exposed to increased intermediate goods imports from China see larger declines in the share of offshorable occupation employment along with faster declines in labor market dynamics. These two facts provide suggestive evidence that the declining rates of labor market dynamics are in part due to a compositional shift away from occupations that are both offshorable and volatile.