"International Trade and Urban Economics" workshop
Center for Market Studies and Spatial Economics is organizing an international workshop "International Trade and Spatial Economics".
Among invited speakers are: Levent Celik (HSE), David Gomtsyan (Turin University), Sergey Kapelyuk (Siberian University of Consumer Cooperation), Jos van Ommeren (Free University of Amsterdam), Pierre Picard (University of Luxembourg), Stephan Heblich (University of Bristol).
The workshop will take place at the HSE - Saint Petersburg building located at 16 Soyuza Pechatnikov street (room 219).
Using Russia Longitudinal Monitoring Survey (RLMS-HSE) data from 1994 to 2013, this study investigates the impact of retirement on health in Russia. The Russian case is remarkable due to relatively low life expectancy and low retirement age. Assessing the effect of retirement on health is challenging because causality also runs in the opposite direction as poor health could lead to earlier retirement. The baseline identification strategy is based on the instrumental variables method that helps to overcome the endogeneity problem. To instrument retirement, I use the eligible retirement age that varies for different categories of employees. I also apply data on retirement expectations from previous waves of the panel and spouse’s labor market participation as additional instrumental variables. The results show significant health-reducing effects of retirement. This effect is observed only for full retirees and does not exist for those who move into part-time retirement. The result is robust to applying different health measures and adjusting for attrition bias. The effect of retirement on health is most significant for males, highly educated, married individuals, those living in urban area, and individuals with low initial health level.
Abstracts of presentations:
Sergey Kapelyuk (Thursday, November 24th @ 11 a.m.):
Impact of Retirement on Health in Russia
David Gomstyan (Thursday, November 14th @ noon):
Structural Change and Regional Growth Patterns in the US
The undergoing technological innovation, globalization and demographic changes had profound effects on the US economy. This paper categorizes US regions into "pro-trend", "anit-trend" and "featureless" groups to study the implications of national trends on regional economic growth. Despite the fact that the US has experienced a significant increase in import competition and a decrease in the manufacturing sector, the results show that large initial share in the manufacturing sector is not necessarily a bad for regional growth. Many regions with high exposure to imports were able to transform their economies and advance in modern services sectors. The results also show that aging population has significantly shifted demand patterns in the US and created growth opportunities for some regions.
Jos van Ommeren (Thursday, November 24th @ 2 p.m.):
Road congestion and public transit (with Martin W. Adler, Federica Liberini and Antonio Russo)
We introduce a novel approach to estimate the marginal external cost of motor vehicle travel when the road supply curve is backward bending using within-day variation in public transit strikes to account for endogeneity issues. We also apply this quasi-experimental approach to estimate the contribution of public transit supply in reducing road congestion. We demonstrate that for Rome the motor vehicle’s marginal external cost is substantial and about four times the private time cost of driving during peak hours. A substantial part of this external cost is borne by bus travellers. By supplying public transit, motor vehicles’ travel time is reduced by 0.14 minutes per kilometer during peak hours. We have a range of policy recommendations to increase public transit use and reduce road congestion. For example, our results support substantial public transit subsidies, the introduction of road pricing as well as a range of quantitative measures (e.g., bus lanes).
Philip Ushchev (Thursday, November 24th @ 3 p.m.):
Welfare in multisectoral models with endogenous product variety (with Kristian Behrens and Sergey Kichko).
We study the welfare implications of intrasectoral shocks whose direct effect is welfare-improving in two-sectoral general equilibrium models with entry. We develop a dual necessary and sufficient condition of welfare losses, which occur when the negative intersectoral effect dominates the positive intrasectoral effect. Our approach is flexible enough to capture (i) bilateral losses from trade in models of intraindustry trade under constant or variable markups, (ii) welfare losses from sectoral productivity improvements in multisectoral models with Melitz-type heterogeneity across firms. We show that, when goods produced by the two sectors are gross complements, welfare gains will always take place. For the case of gross substitutes, we develop a systematic procedure of constructing examples of losses. In particular, we show that, for losses from trade to occur, neither any asymmetries across countries, nor variable markups in either sector are essential. The only source of possible distortions is the interplay between (i) consumers' love for variety and (ii) the adjustment of sectoral budget shares to the new level of trade freeness.
Levent Celik (Friday, November 25th @ 11 a.m.):
Fast-track Authority: A Hold-Up Interpretation (joint with Bilgehan Karabay and John McLaren).
A central institution of US trade policy is Fast-Track Authority (FTA), by which Congress commits not to amend a trade agreement that is presented to it for ratification, but to subject the agreement to an up-or-down vote. We offer a new interpretation of FTA based on a hold-up problem. If the US government negotiates a trade agreement with the government of a smaller economy, as the negotiations proceed, businesses in the partner economy, anticipating the opening of the US market to their goods, may make sunk investments to take advantage of the US market, such as quality upgrades to meet the expectations of the demanding US consumer. As a result, when the time comes for ratification of the agreement, the partner economy will be locked in to the US market in a way it was not previously. At this point, if Congress is able to amend the agreement, the partner country has less bargaining power than it did ex ante, and so Congress can make changes that are adverse to the partner. As a result, if the US wants to convince such a partner country to negotiate a trade deal, it must first commit not to amend the agreement ex post. In this situation, FTA is Pareto-improving.
Pierre Picard (Friday, November 25th @ noon):
Vertical Differentiation and Trade with Many Countries
We analyze a trade model with non-homothetic preferences, different quality versions of each product and countries with heterogenous sizes and productivity. We focus on an analytically tractable version of the model that uses linear expenditures. Income effects affect the quality composition of consumption and trade flows. It is shown that high-income countries specialize in the production of high-quality goods and trade more of those. Also, richer countries purchase more high-quality varieties, import more high quality products from the more productive exporters. Finally, higher "linear" linear import barriers (tariffs or remoteness) is equivalent to a loss of country productivity. Higher "iceberg" bilateral trade barriers raise the average quality of imports.
Stephan Heblich (Friday, November 25th @ 2 p.m.):
East Side Story: Historical Pollution and Persistent Neighborhood Sorting
Why are the East sides of former industrial cities like London or New York poorer and more deprived? We argue that this observation is the most visible consequence of the historically unequal distribution of air pollutants across neighborhoods. In this paper, we geolocate nearly 5,000 industrial chimneys in 70 English cities in 1880–at the peak of the Industrial Revolution–and use an atmospheric dispersion model to recreate the spatial distribution of pollution. First, individual-level census data show that pollution induced neighborhood sorting during the course of the nineteenth century. Historical pollution patterns explain up to 15% of within-city deprivation in 1881. Second, these equilibria persist to this day even though the pollution that initially caused it has waned. A quantitative model shows the role of non-linearities and tipping-like behaviors in such persistence.
Kristian Behrens (Friday, November 25th @ 3 p.m.):
Are clusters resilient? Evidence from Canadian textile industries (with Brahim Boualam and Julien Martin).
We investigate the effect of geographic clustering on the resilience of plants to adverse economic shocks. Focusing on the Canadian textile and clothing sector — using microgeographic data, well-identified clusters, and a well-identified shock — we provide the first quantitative evidence of this effect. Our difference-in-difference approach finds no evidence that geographic clustering makes plants more resilient in terms of either survival, or employment growth, or industry switching. On the contrary, our results show that clustered plants are more likely to exit than non-clustered plants, and are also less likely to adapt by switching their main line of business. Clusters hence do not seem to shelter firms from large industry shocks or help them to recover from or adapt to such shocks. While smaller specialized clusters tend to perform better than larger diversified ones under ‘business-as-usual’ (i.e., in the absence of large industry shocks), our results show that the reverse holds under ‘disruption’ (i.e., in the presence of large industry shocks).