Productivity Measurement and the Impact of Trade and Technology on Wages: Estimates for the U.S., 1972-1990

We develop an empirical framework to assess the importance of trade and technical change on the wages of production and nonproduction workers. Trade is measured by the foreign outsourcing of intermediate inputs, while technical change is measured by the shift towards high-technology capital such as computers. In our benchmark specification, we find that both foreign outsourcing and expenditures on high-technology equipment can explain a substantial amount of the increase in the wages of nonproduction (high-skilled) relative to production (low-skilled) workers that occurred during the 1980s. Surprisingly, it is expenditures on high-technology capital other than computers that are most important. These results are very sensitive, however, to our benchmark assumption that industry prices are independent of productivity. When we allow for the endogeneity of industry prices, then expenditures on computers becomes the most important cause of the increased wage inequality, and have a 50% greater impact than does foreign outsourcing.

Foreign Direct Investment and Relative Wages: Evidence from Mexico's Maquiladoras

In this paper, we examine the increase in the relative wages of skilled workers in Mexico during the 1980s. We argue that rising wage inequality in Mexico is linked to capital inflows from abroad. The effect of these capital inflows, which correspond to an increase in outsourcing by multinationals from the United States and other Northern countries, is to shift production in Mexico towards relatively skill-intensive goods thereby increasing the relative demand for skilled labor. We study the impact of foreign direct investment (FDI) on the share of skilled labor in total wages in Mexico using state-level data on two-digit industries from the Industrial Census for the period 1975 to 1988. We measure the state- level growth in FDI using data on the regional activities of foreign- owned assembly plants. We find that growth in FDI is positively correlated with the relative demand for skilled labor. In the regions where FDI has been most concentrated, growth in FDI can account for over 50 percent of the increase in the skilled labor share of total wages that occurred during the late 1980s.

Intermediaries in Entrepot Trade: Hong Kong Re-Exports of Chinese Goods

In this paper, we examine Hong Kong's role in intermediating trade between China and the rest of the world. Hong Kong distributes a large fraction of China's exports. Net of customs, insurance, and freight charges, re-exports of Chinese goods are much more expensive when they leave Hong Kong than when they enter. Hong Kong markups on re-exports of Chinese goods are higher for differentiated products, products with higher variance in export prices, products sent to China for further processing, and products shipped to countries which have less trade with China. These results are consistent with quality-sorting models of intermediation and with the outsourcing of production tasks from Hong Kong to China. Additional results suggest that Hong Kong traders price discriminate across destination markets and use transfer pricing to shift income from high-tax countries to Hong Kong.

Ownership and Control in Outsourcing to China: Estimating the Property-Rights Theory of the Firm

In this paper, we develop a simple model of international outsourcing and apply it to processing trade in China. We observe China's processing exports broken down by who owns the plant and by who controls the inputs the plant processes. Multinational firms engaged in export processing in China tend to split factory ownership and input control with managers in China: the most common outcome is to have foreign factory ownership but Chinese control over input purchases. To account for this organizational arrangement, we appeal to a property-rights model of the firm. Multinational firms and the Chinese factory managers with whom they contract divide the surplus associated with export processing by Nash bargaining. Investments in input search, production, and marketing are partially relationship specific. In our benchmarks estimates, this relationship specificity is lowest in southern coastal provinces, where export markets are thickest, and highest in interior and northern provinces. The probability contracts are enforced has a similar pattern and is the lowest along the southern coast and the highest in the north.

The Value of Information in International Trade: Gains to Outsourcing through Hong Kong

In this paper, we estimate the benefits to countries that purchase goods from China of having access to intermediary services provided by Hong Kong. Traders in Hong Kong supply information on markets and producers in China, which provides welfare gains to foreign firms using these services. During the 1990s, Hong Kong intermediated about half of the goods that China exported to the rest of the world. Our results suggests that gains to intermediary services provided by Hong Kong equal 16% of the value of goods that China exports to other countries through Hong Kong, and range between 10% and 21% of this export value for various manufacturing goods and across different years.

PROJECT FOR THE ANALYSIS OF LAND TENURE AND AGRICULTURAL PRODUCTIVITY IN THE REPUBLIC OF MACEDONIA

The paper arises out of the Land Market Project and covers detailed data at the individual farm level and in-depth analyses of legal and historical processes. The agricultural sector in Macedonia is characterized by two very different farm enterprise types: small family farms operating on privately owned land, and large socially owned farms. About 30 percent of the total arable land in Macedonia belongs to socially owned farms. Most of the balance belong to the private farm sector; the cooperative sector occupies a small percentage of the arable land. The Land Markets Project addressed five tasks during the six-month term of the project: (1) assess the appropriateness of legislation, regulations, and institutions affecting land tenure and land use, (2) document and assess the land-related constraints to increased productivity and profitability of private farms, (3) document and assess the land-related constraints to increased productivity and profitability of socially owned farms, (4) propose land policy adjustments that would promote increased productivity and profitability of the agricultural sector, (5) identify financial and technical assistance to support the development of land markets that promote efficient, sustainable, and equitable increases in agricultural incomes. This paper reports the results of the first three tasks and then presents a comparative review of the land tenure and productivity results for both the private and the social sector. This comparison forms a basis for policy dialogue. The paper also includes a comprehensive discussion of the policy recommendations that stem from the Land Markets Project.Land tenure--Macedonia (Republic), Land use, Rural--Economic aspects--Macedonia (Republic), Farms, Size of--Macedonia (Republic), Agriculture--Economic aspects--Macedonia (Republic), Agricultural productivity--Macedonia (Republic), Land markets--Macedonia (Republic), Agrarian structure--Macedonia (Republic), Land Economics/Use, Productivity Analysis,

Outsourcing and Volatility

While outsourcing of production from the U.S. to Mexico has been hailed in Mexico as a valuable engine of growth, recently there have been misgivings regarding its fickleness and volatility. This paper is among the first in the trade literature to study the second moment properties of outsourcing. We begin by documenting a new stylized fact: the maquiladora outsourcing industries in Mexico experience fluctuations in value added that are roughly twice as volatile as the corresponding industries in the U.S. A difference-in-difference method is extended to second moments to verify the statistical significance of this finding. We then develop a stochastic model of outsourcing with heterogeneous firms that can explain this volatility. The model employs two novel mechanisms: an extensive margin in outsourcing which responds endogenously to transmit shocks internationally, and translog preferences which modulate firm entry.

An Inferred Sex Differential in Copper Metabolism in Ross' Geese (Anser rossii): Biogeochemical and Physiological Considerations

The geology and the levels of various minerals in the nutrient chain of the ecosystems of the breeding grounds of most populations of wild geese are distinctive. Hence minerals that become incorporated in the keratin of the primary feathers grown on the breeding grounds can be used as biological tracers to determine origins of migrants. Hormones indirectly affect the levels of some minerals in the feather keratin. Estrogen is presumed to account for higher levels of copper found in the primary feathers of adult female, as compared with adult male, Ross' geese (Anser rossii)