New Imported Inputs, New Domestic Products

We study the effects of new imported inputs on the entry of new domestic products and their characteristics. To this purpose, we construct a novel, comprehensive and extremely detailed dataset, which contains product-level information on foreign trade and domestic production for 25 EU countries over 1995-2007. Using these data, we identify new domestic goods and new imported inputs, controlling for all changes in commodity classifications over time. We then show that new imported inputs substantially boost the introduction of new domestic products. We also show that this effect is directly proportional to the quality of new imported inputs and inversely related to their price (conditional on quality). Finally, we document that new products are characterized by higher prices and higher quality relative to existing goods, and that such premia are larger the greater is the use of new imported inputs in production.New Intermediate Inputs; Product Innovation; Input and Output Prices; Input

Firm heterogeneity and endogenous regional disparities.

Firm heterogeneity; Heterogeneity;

Globalization and entrepreneurship

nrpages: 41status: publishe

New Imported Inputs, Wages and Worker Mobility [WP]

We provide a comprehensive assessment of the effects of new imported inputs on wage dynamics, on the skill-composition of the labor force, on worker mobility, and on the efficiency of matching between firms and workers. We employ matched employer-employee data for Italy, over 1995-2007. We complement these data with information on the arrival of new imported inputs at the industry level. We find new imported inputs to have a positive effect on average wage growth at the firm level. This effect is driven by two factors: (1) an increase in the white-collar/blue-collar ratio; and (2) an increase in the average wage growth of blue-collar workers, while the wage growth of white collars is not significantly affected. The individual-level analysis reveals that the increase in the average wage of blue collars is driven by the displacement of the lowest paid workers, while continuously employed individuals are not affected. We estimate the unobserved skills of workers following Abowd et al. (1999). We find evidence that new imported inputs lead to a positive selection of higher-skilled workers, and to an improvement in positive assortative matching between firms and workers

The social footprint of globalisation: towards the introduction of strategic industries in quantitative trade models

We argue that our understanding of industrial policy in the presence of ‘strategic’ industries that exert positive externalities on the national economy may benefit from an extension of quantitative general equilibrium trade models making the extent and pattern of trade-induced reallocations more salient. To make these features relevant for national welfare, we introduce the notion of the ‘social footprint’ of globalisation as the result of suboptimal trade-induced structural transformation in the presence of externalities. For proof of concept, we use simple workhorse models featuring two countries and two industries (only one of which is ‘strategic’) to highlight the role of the ‘scale elasticity’ of the strategic industry and the consequences of the most common assumptions on market structure in quantitative trade analyses

The rise of populism in advanced economies: blame it on globalisation?

Protectionism and isolationism have been growing throughout the world, in what became known as the backlash against globalisation. Using newly assembled data for 23 industrialised, advanced democracies and global trade data, Italo Colantone, Gianmarco Ottaviano, and Piero Stanig analyse voting behaviour and track trade policy interventions. They write that international trade is not the only factor causing ... Continue

The rise of populism in advanced economies: blame it on globalisation?

Protectionism and isolationism have been growing throughout the world, in what became known as the backlash against globalisation. Using newly assembled data for 23 industrialised, advanced democracies and global trade data, Italo Colantone, Gianmarco Ottaviano, and Piero Stanig analyse voting behaviour and track trade policy interventions. They write that international trade is not the only factor causing the upheaval. Society must manage the distributional consequences of structural change in a more inclusive way

The political consequences of green policies: evidence from Italy

For many governments, enacting green policies is a priority, but such policies often impose on citizens substantial and uneven costs. How does the introduction of green policies affect voting? We study this question in the context of a major ban on polluting cars introduced in Milan, which was strongly opposed by the populist right party Lega. Using several inferential strategies, we show that owners of banned vehicles— who incurred a median loss of €3,750—were significantly more likely to vote for Lega in the subsequent elections. Our analysis indicates that this electoral change did not stem from a broader shift against environmentalism, but rather from disaffection with the policy’s uneven pocketbook implications. In line with this pattern, recipients of compensation from the local government were not more likely to switch to Lega. The findings highlight the central importance of distributive consequences in shaping the political ramifications of green policies