Adjusting to Trade Opening: The Case of Labor Share in India\u27s Manufacturing Industry

The objective of this paper is to study how manufacturing plants in India adjusted to trade liberalization during the period 1998–99 to 2007–08. We estimate how the labor share changed due to tariff reduction. Our results indicate that a decline in output tariffs led to an increase in the labor share of income. In contrast, a fall in input tariffs led to a decrease in the labor share. Controlling for factor intensity, we find that in technology intensive and human capital resource intensive sectors, both a decline in input and output tariff rates led to a decline in labor share. A fall in tariffs only led to an increase in labor share for labor intensive and low-technology plants. Hence, India’s bias towards capital and technology intensive production explains the overall decline in labor share in the post reform period. Furthermore, the empirical results show that labor adjustment occurred more efficiently in Indian states with flexible labor laws

Heterogeneous quality firms and trade costs

There is increasing empirical evidence that vertical product differentiation is an important determinant of international trade. However, the economic literature so far has solely focused on the case in which quality trade stems from differences between countries. No studies investigate the role of quality trade between similar economies. This paper first develops a simple theoretical trade model that includes vertical product differentiation in a heterogeneous-firm framework. The model yields three main predictions for trade between similar economies. First, exported goods are of higher quality than goods sold on the domestic market. Second, larger economies have on average higher export qualities compared with smaller economies. Third, with increasing trade costs higher quality goods are exchanged. For all three effects, strong empirical support is found using detailed export trade data of the United States and 15 European Union countries.Economic Theory&Research,Markets and Market Access,Common Carriers Industry,Free Trade,Transport and Trade Logistics

Heterogeneous Quality Firms and Trade Costs

There is increasing empirical evidence that vertical product differentiation is an important determinant of international trade. However, the economic literature so far has solely focused on the case in which quality trade stems from differences between countries. No studies investigate the role of quality trade between similar economies. This paper first develops a simple theoretical trade model that includes vertical product differentiation in a heterogeneous-firm framework. The model yields three main predictions for trade between similar economies. First, exported goods are of higher quality than goods sold on the domestic market. Second, larger economies have on average higher export qualities compared with smaller economies. Third, with increasing trade costs higher quality goods are exchanged. For all three effects, strong empirical support is found using detailed export trade data of the United States and 15 European Union countries.Trade Costs, Quality, Vertical Product Differentiation.

Booms and booze: on the relationship between macroeconomic conditions and alcohol consumption.

This paper investigates the relationship between macroeconomic conditions and alcohol consumption using country-level data from 159 countries between 1961 and 2004. We use the change in per capita alcohol consumption as the main dependent variable and the growth of per capita gross domestic product as main independent variable. Overall, we find a robust procyclical relationship. Furthermore, our results suggest that whereas high-, middle-, and low-middle income countries show a clear procyclical trend, drinking behavior in low-income countries remains largely unchanged following macroeconomic shocks. Studying different alcoholic beverages, our results indicate that the consumption of spirits is most sensitive to economic swings, whereas the consumption of wine and beer is less elastic.

Border Effect Estimates for France and Germany Combining International Trade and Intranational Transport Flows

Since the seminal contribution of McCallum (1995) economists have tried to estimate the border effect for other countries than the United States and Canada, but have been confronted with a key data problem: data on regional trade flows are extremely rare. The different approaches put forward to overcome this lack of information have been shown to hinge crucially on certain distance measures. The main purpose of this paper is to develop a method that allows us determining border effects with a high degree of accuracy in the absence of intra-national trade data. We show how to improve the estimation of border effects with the example of France and Germany using data on regional transportation flows. Our results indicate that France trades about eight times more and Germany about three times more with itself than with other EU countries, respectively, compared to the predictions of the gravity equatio

The Jewish “Other” in Argentina: Antisemitism, Exclusion, and the Formation of Argentine Nationalism and Identity in the 20th Century and during Military Rule (1976-1983)

Throughout the 20th century, Argentine leaders and social actors attempted to shape distinct national identities and a sense of nationalism that corresponded to their respective political ideologies. Beginning in the first couple decades of the 20th century, the formation of a Jewish “other” would be central to the construction of both Argentine national identity and nationalism. This thesis argues that the military dictatorship that led the country from 1976 to 1983 built on this othering of the Jewish community as military leaders sought to forge a national identity linked to Catholicism. It focuses first on three separate periods of the early and mid-20th centuries and how governments in that period built, maintained, and altered the view of the Jewish community as a not fully Argentine “other” living in the country. Using several editions of a far-right antisemitic periodical, declassified State Department documents, and testimonies of Jewish political prisoners and soldiers, the thesis transitions to focus on the military dictatorship of the 1970s and 1980s. It examines two separate periods of the dictatorship, highlighting first the role antisemitic beliefs, and opposing such views, had in an internal power struggle within the military government. In the second period of the dictatorship, during the Malvinas (Falklands) War, the thesis examines how antisemitism became a central part of the military’s efforts to consolidate a sense of national unity during the conflict, even as Jews participated largely for the first time within Argentine nationalism and the military

Transparency, trade costs, and regional integration in the Asia Pacific

The authors show in this paper that increasing the transparency of the trading environment can be an important complement to traditional liberalization of tariff and non-tariff barriers. Our definition of transparency is grounded in a transaction cost analysis. The authors focus on two dimensions of transparency: predictability (reducing the cost of uncertainty) and simplification (reducing information costs). Using the Asia Pacific Economic Cooperation (APEC) member economies as a case study, the authors construct indices of importer and exporter transparency for the region from a wide range of sources. Our results from a gravity model suggest that improving trade-related transparency in APEC could hold significant benefits by raising intra-APEC trade by proximately USD 148 billion or 7.5 pecent of baseline trade in the region.Economic Theory&Research,Free Trade,Emerging Markets,Debt Markets,Trade Policy

The Impact of Increased Import Competition from the People’s Republic of China on Income Inequality and Household Welfare in Viet Nam

This paper examines the surge of imports from the PRC to Viet Nam from 2000 to 2014 in order to evaluate the effects of increased exposure to trade with the PRC on income inequality and household welfare in Viet Nam. Using household level data from the Viet Nam Household Living Standard Survey and combining it with measures of trade exposure, we find that increased imports led to a fall in inequality at the provincial and district level. We distinguish between intermediate and final goods and find similar results. In order to better understand the relative gains and losses across income groups, we apply a quantile regression approach. Our results indicate that increased imports were more often positively correlated with household income for households located in the lower quantiles. In contrast, for households in the upper quantiles the correlation is either negative or less pronounced