- International Trade, Labor Economics, Economic Development.
Abstract: This paper provides evidence that increasing import competition is associated with a narrowing gender wage gap in the U.S.. I study the role of costly sectoral mobility in the adjustment of male and female workers to import competition shocks. I consider a dynamic model of sectoral choice and structurally estimate mobility costs using data from the March Current Population Survey and O*NET. A measure of intersectoral distance in task characteristics facilitates the structural estimation of switching costs that vary by gender and across sectors. In a set of trade shock simulations, I show that increasing import competition shock in the manufacturing sector disproportionately affects male employment and wages for two reasons. First, the manufacturing sector is male labor-intensive. Second, men face higher costs of exiting from the manufacturing sector into services. As a result, the long-run wage and welfare gains from trade are more than 30 percent higher for women than men.
Work in Progress
- Exporter Adjustment to International Shocks in the Presence of Costly Labor Mobility.
Abstract: This paper studies the role of costly intersectoral labor mobility in accounting for slow adjustment of international trade volumes to changes in trade costs. Industries with high barriers to workers' entry exhibit slower growth in export values in response to international demand shocks. This prediction is confirmed using the variation in Uruguay Round ad-valorem tariff cuts interacted with the structurally estimated workers' mobility costs. Because industry-specific skills are not fully transferable across industries, mobility frictions serve as a capacity constraint in the adjustment process.
- Structural Transformation and Labor Mobility over the Life Cycle. (joint with James Lake and Michael Sposi)
Abstract: Most existing models of structural change assume that workers are homogeneous and perfectly mobile across sectors. We show that, since the peak of the U.S. manufacturing sector employment in 1980, about 20 percent of the net decline in its share is accounted for by the increasing direct net outflow of workers from manufacturing to services. The remainder of the decline is attributed to the growing wedge between the numbers of workers exiting the manufacturing sector to non-employment and the number of new workers entering labor force through the manufacturing sector. Over time, young workers exhibit higher probability of joining the service sector from both non-employment and manufacturing sector. We show that, due to uneven technological growth and international trade policies, worker cohorts face different paths of relative prices at the time of entry into the labor force. We quantitatively assess the role of costly intersectoral mobility and the life-cycle component in the process of structural transformation.
- International Trade with Two-Sided Information Frictions. (joint with Cathy Zhang)
Abstract: Standard trade theories based on frictionless competitive markets sidestep the question of how information frictions affect the direction and duration of trade relationships. These frictions include the costs of searching for trade partners and learning about demand conditions in a foreign country. This paper develops a search model of international trade with information frictions for both importers and exporters. The endogenous termination of trade relationships allows us to identify the determinants of the duration of trade. The model produces predictions about the geography, volume, and duration of trade matches.