Международный научный семинар "Международная торговля и региональная экономика"

Kristian Behrens (Университет Квебека в Монреале, НИУ ВШЭ)

Cities in motion: Gentrification and local businesses (joint with Brahim Boualam, Julien Martin, and Florian Mayneris)

Cities are in motion. Neighborhoods rise, tip, decline, and rise again over either long cycles or quite short periods. This paper focuses on gentrification, i.e., rapid change in neighborhood composition towards highly educated and affluent residents. Since neighborhood changes go hand-in-hand with modifications in the local economic tissue, we introduce establishments and firms into the analysis to better understand the dynamics of these changes. To account for the highly localized nature of these dynamics, we build a new spatially fined-grained dataset combining socio-economic data on residents and information on the universe of businesses in the New York MSA over the period 1990-2010. We use those data to first identify gentrifying neighborhoods. We then document the changes in economic activities associated with the gentrification process. The arrival of some specific businesses precedes the gentrification episodes, whereas the arrival or disappearance of others follows it. Does the presence of clusters of ‘pioneer’ establishments — local businesses that precede gentrification episodes — help predict future spots of gentrification? And how does the economic tissue change during the gentrification process? To answer those questions, we build indexes and detect clusters of local specialization in pioneer sectors. We then do out of sample predictions using 1990-2000 data to predict the gentrifying places that emerged between 2000 and 2010. We also apply these techniques to other U.S. cities such as Boston and Philadelphia.

Douglas Campbell (РЭШ)

Relative Prices, Hysteresis, and the Decline of American Manufacturing

This study uses new measures of real exchange rates to study the collapse of US manufacturing employment in the early 2000s in historical and international perspective. To identify a causal impact of RER movements on manufacturing, I compare the US experience in the early 2000s to the 1980s, when large fiscal deficits led to a sharp appreciation of the dollar, and to Canada’s experience in the mid-2000s, when high oil prices and a falling US dollar led to an equally sharp appreciation of the Canadian dollar. Using disaggregated sectoral data and a difference-in-difference methodology, I find that an appreciation in relative unit labor costs for the US led to disproportionate declines in employment, output, investment, and productivity in relatively more open manufacturing sectors. I also find that the impact of a temporary shock to real exchange rates is surprisingly long-lived (evidence of hysteresis), and that the appreciation of US relative unit labor costs can plausibly explain more than two-thirds of the decline in manufacturing employment in the early 2000s.

Gunes Gokmen (РЭШ)

The imperial roots of global trade (joint with Wessel Vermeulen and Pierre-Louis Vezina)

Today’s countries emerged from hundreds of years of conquests, alliances and downfalls of empires. Empires facilitated trade within their controlled territories by building and securing trade routes, imposing common languages, religions, legal systems, and facilitating migration. This led to the accumulation of trade-enhancing, or trading capital. In this paper we use data on the reach of 140 empires across the world since 2500 BC as well as on international trade in the 2000s to construct estimates of trading capital. We find that trading capital has a positive and significant effect on trade, consistent with a slow erosion of trade linkages after breakups and long-run persistence. Trade between countries that were once in a common empire is on average 24% larger than that between unrelated countries.

Sergey Kichko (НИУ ВШЭ)

How do trade and communication costs shape the spatial organization of firms? (with Toshitaka Gokan and Jacques-Francois Thisse)

We show how trade and communication costs interact to shape the way firms organize their activities across space. We consider the following three organizational types: (i) integrated firms in which all activities are conducted under the same roof, (ii) horizontal firms, which operate several plants producing the same good at different locations, and (iii) vertical firms, which perform distinct activities at separated locations. We find necessary and sufficient conditions for the three types of organization to coexist within the same country, whereas firms located in the other country are all spatially integrated. We then study how trade and communication costs affect firms' organizational choices. First, lower trade costs lead fewer firms to go multinational. By contrast, less expensive communication flows leads to more investment abroad. The reason for this difference in results is that the two types of spatial frictions differ in nature: in the proximity-concentration trade-off, lower trade costs weaken the need for proximity, while lower communication costs foster deconcentration.

Hans Koster (Свободный университет Амстердама)

Amenities and the Social Structure of Cities (with Carl Gaigne, Fabien Moizeau and Jacques-Francois Thisse)

We develop a new model of a «featureful» city in which locations are differentiated by two attributes, that is, the distance to employment centers and the accessibility to given amenities, and we show how heterogeneous households in income are sorted out across the urban space. Under Stone-Geary preferences, the spatial income distribution is governed by a location-quality index which reflects the interaction between the amenity and commuting cost functions. The residential equilibrium typically involves the spatial separation of households sharing similar incomes. Using data on Dutch cities, we show that there is a causal relationship between the amenity level and consumer income, suggesting that richer households sort themselves into high amenity locations. We do not find strong evidence that employment accessibility leads to income segregation, suggesting that the standard monocentric city model without amenities is a poor predictor of the social structure of cities.

Udo Kreickemeier (Технический университет Дрездена)

The exporter wage premium when firms and workers are heterogeneous (with Hartmut Egger, Peter Egger, and Christoph Moser)

We set up a trade model with heterogeneous firms and a worker population that is heterogeneous in two dimensions: workers are either skilled or unskilled, and within each skill category there is a continuum of abilities. Workers with high abilities, both skilled and unskilled, are matched to firms with high productivities, and this leads to wage differentials within each skill category across firms. Self-selection of the most productive firms into exporting generates an exporter wage premium, and our framework with skilled and unskilled workers allows us to decompose this premium into its skill-specific components. We employ linked employer-employee data from Germany to structurally estimate the parameters of the model. Using these parameter estimates, we compute an average exporter wage premium of 5 percent. The decomposition by skill turns out to be quantitatively highly relevant, with exporting firms paying no wage premium at all to their unskilled workers, while the premium for skilled workers is 12 percent.

Giacomo Ponzetto (CREI - Университет Помпеу Фабра)

Globalization and Political Structure (with Gino Gancia and Jaume Ventura)

The first wave of globalization (1830-1914) was accompanied by a decline in the number of countries from 125 to 54. The second wave of globalization (1950-present) has led instead to an increase in the number of countries to a record high of more than 190. This paper develops a theoretical framework to study the interaction between globalization and political structure. We show that political structure adapts to expanding trade opportunities in a non-monotonic way. Borders hamper trade. In its early stages, the political response to globalization consists of removing borders by increasing country size. In its later stages, however, the political response to globalization is to remove borders by creating economic unions, and this leads to a reduction in country size.

Victoria Purice (Университет Гронингена)

Borders and Indirect Productivity Effects from Foreign Direct Investment

This paper draws upon a large, multi-country firm-level dataset for seven Central European countries to investigate the impact of national borders on productivity spillovers from multinational enterprises to local firms. Our findings suggest that national borders constitute an almost insurmountable barrier for horizontal and forward spillover effects. In the case of backward spillover effects national borders significantly dampen cross-border spillover effects, but the size of the impact of the border is heterogeneous as evidenced by differential effects for Schengen and non-Schengen borders.

Davide Suverato (Мюнхенский университет)

Finance, Organization, and the Product Mix of Exporters (with Dalia Marin and Thierry Verdier)

Multi-product firms, though more efficient, have a dark side, they trade at a conglomerate discount. Exporters suffer a smaller conglomerate discount compared to domestic firms. We introduce an internal capital market into a two factor model of multi-product firms to explain these facts. We find that in the competition for funds inside the firm, the managers of the best divisions are empire builders and strategically over-report their costs receiving excessive financing possibly crowding out funding of less good divisions. This pattern of capital allocation is consistent with the observed capital expenditures across divisions of publicly listed US companies and explains the lower market to book value of conglomerates. We find further that a tougher trade environment leaves less room for the mis-reporting of costs improving the efficiency of the internal capital market. Finally, we find that firms face a trade-off between introducing a new product or exporting an existing one which tends to make exporters less diversified than domestic firms. The latter two mechanisms explain why the conglomerate discount is lower for exporters.

Alexander Tarasov (НИУ ВШЭ)

Heterogeneous consumers matching heterogeneous firms in monopolistic competition (with Sergey Kokovin and Shamil Sharapudinov)

Our novel approach to modeling monopolistic competition with heterogeneous consumers involves a space of characteristics of differentiated good (consumers’ ideal points), alike Hotelling (1929). Firms have heterogeneous costs `a la Melitz (2003), but choosing its price, every firm chooses also its optimal location, i.e., “niche”. We prove “perfect sorting”: the most efficient firms choose locations, where the consumer’s density is maximal, while the weaker is a firm – the farther it locates from attractive well-populated areas, to escape competition from the strong firms. Other market effects include non-monotone markups, high in the most and least populated zones; and monotone welfare, increasing in population density.

Philip Ushchev (НИУ ВШЭ)

On the Dilution of Market Power (with S. Kokovin, M. Parenti and J.-F. Thisse)

We show that a market involving a handful of large-scale firms and a myriad of small-scale businesses may give rise to different types of market structure, ranging from monopoly or oligopoly to monopolistic competition through new types of market structure. In particular, we find conditions under which the free entry and exit of small firms incentivizes the big firms to sell their varieties at the monopolistically competitive prices, behaving as if in monopolistic competition. We call this result dilution of market power. The structure of preferences is the main driver for a specific market structure to emerge as an equilibrium outcome.