"Global Value Chains and Labor Standards: The Race-to-the-Bottom Problem", 2024, with John McLaren, R&R at Economic Journal
Abstract. We ask how globalization affects a government's incentives to set labor standards for its workers. In a stylized equilibrium model of global value chains, we find two contrasting results. First, each country chooses stricter labor standards with globalization than it would under autarky, because labor standards are a normal good and the general increase in incomes from globalization increases demand for them. We call this the effect of `globalization in the large.' Second, if more countries join the world economy so that globalization increases at the margin, labor standards worsen (improve) at the margin if a country is competing with countries that are very similar to (different from) itself. We call this the effect of `globalization at the margin.' In equilibrium, labor standards are actually stricter than optimal because each country is able to pass some of the costs of its improved labor standards onto other countries (consumers of the final good, for example).
"Foreign Direct Investment, Global Value Chains, and Labor Rights: No Race-to-the-Bottom?", 2023, with John McLaren, NBER Working Paper No. 31363
Abstract. In a stylized model of multinational firms choosing host locations for their global value chains, host-country governments choose the strength of collective-bargaining rights that allow their workers to receive a share of the resulting quasi-rents. Each government must trade off the direct benefit of stronger bargaining rights against both the effect of chasing multinationals away to rival countries and general-equilibrium effects of discouraging investment in the industry altogether. We find that an increase in globalization in the sense of lower transaction costs has no effect on equilibrium workers' rights, but adding more countries to the global trading system tends, in the limit, to weaken them. Thus, as a matter of theory, the effect of globalization on labor rights is ambiguous. Empirically, we find little evidence that globalization drives movements in labor rights in either direction.
"Who Pays Shipping? Theory and Evidence on International Delivery Terms"
Abstract. Various terms of delivery in international trade are better known as international commercial terms (Incoterms). I consider the role of freight costs in the choice of international delivery terms by introducing a simple model. The model shows that large or experienced exporters pay for international shipping rather than importers. The first-order effects of freight costs are ambiguous; however, as freight rate factors such as bilateral distance and product weight increase, large or experienced exporters are more likely to be responsible for shipping. I test these hypotheses using novel data drawn from the export declaration forms compiled by all exporters in Korea, which are disaggregated into product, destination countries, firm size, and Incoterms. The empirical findings are consistent with these predictions. These results imply that freight costs are a source of profit-enhancing opportunities for firms in international trade.
"Trade and Growth Redux"
Abstract. This study revisits the old question “does trade cause growth?” with a new approach. Taking Arkolakis et al. (2012)’s welfare equation as an estimating equation, I provide reduced-from evidence on welfare gains from trade. In doing so, I use a new time-varying instrumental variable, which is structurally derived from a gravity equation, to address endogeneity of trade in panel regression of income growth. Using the 1950–2019 data, I find that near-autarky countries in the sample, on average, exhibit welfare gains of 14.7–16.4% as they move from autarky to the current trading environment. Among many classes of quantitative trade models, the results are most aligned with a multiple-sector model with intermediate goods and monopolistic competitive markets with homogenous firms. Furthermore, I find that income elasticity with respect to trade is smaller than previous findings. As trade openness increases by one percentage point, real GDP per capita increases by 1.11% to 1.47%.
"Global Value Chain Disruption during the COVID-19 Pandemic: Korean Firm-level Evidence", 2025, the World Economy, Volume 48, Issue 5, pp.1139-1155
"Asymmetry and Non-linearity in Exchange Rate Pass-through: Evidence from Scanner Data", 2024, with In Kyung Kim and Jinhyuk Lee, Journal of International Money and Finance, Volume 149, November, pp.1-27.
"Local Labor Market Effects of Offshoring-Induced Layoffs: Evidence from the U.S. Trade Adjustment Assistance Program", 2024, with Yang Shen and Myunghwan Yoo, Journal of Regional Science, Volume 64, Issue 3, pp.931–960.
"Does Offshoring Raise Female Employment in a Developing Country? Evidence from Indonesian manufacturing plants", 2024, with Hisamitsu Saito, the World Economy, Volume 47, Issue 6, pp.2608–2630.
"Cross-border Trade Credit and Trade Flows during the Global Financial Crisis", 2022, with Moon Jung Choi and Sangyeon Hwang, International Review of Economics & Finance, Volume 82, November, pp.497-510
"Product Heterogeneity in International Terms of Payment", 2021, Economic Inquiry, Vol. 59, Issue 4, pp.1661-1686
"Not All Goods are Created Equal: Tariff Concessions in the Korea-China FTA", 2021, The Singapore Economic Review, Vol. 66, No. 5, pp. 1205-1219
"Why did the Terms of Payment in International Trade Change so Much?", 2019, with Sangyeon Hwang, Applied Economics Letters, Vol. 26, Issue 7, pp.576-581
"International Trade Finance and Exports: Evidence from Korean Bank-Intermediated Trade Finance Instruments", 2017, with Sangyeon Hwang, Open Economies Review, Vol. 28, Issue 2, pp. 319-346
"Has the Chile-Korea FTA Served as a Bridgehead FTA?", 2017, with Shi Young Lee and Eunjung Lim, Journal of the Asia Pacific Economy, Vol. 22, Issue 3, pp. 477-485
"Import Competition and Post-Displacement Wages in Korea: Whom You Trade with Matters", 2016, with Youngho Kang, The B.E. Journal of Economic Analysis & Policy, Vol. 16, Issue 4, pp. 1-6
"The Effects of Regional Trade Agreements on FDI by its Origin and Type: Evidence from U.S. Multinational Enterprises", 2016, Japan and the World Economy, Vol. 39, September, pp. 1-11
"Financial Shocks and Trade Finance: Evidence from Korea", 2013, with Sangyeon Hwang, Economics Letters, Volume 120, Issue 1, pp. 104-107
"The Effects of Trading Blocs on U.S. Outward FDI Activity: The Role of Extended Market Size", Journal of East Asian Economic Integration, 2012, Vol.16, No.2, pp. 205-225
"Empirical Analyses on U.S. Congressional Voting on Recent FTA Bills", 2011, with Hankyoung Sung, The B.E. Journal of Economic Analysis & Policy, Vol. 11: Iss. 1 (Topics), Article 74, pp. 1-35
“Implications of Global Financial Crisis on Korea's Trade", 2009, with Sangyeon Hwang, Asian Economic Papers, Vol.3, No.3, pp.46-81
"Equilibrium Coalition Structures in the Presence of Foreign Direct Investment", 2009, Journal of International Trade & Economic Development, Vol.18, No.1, pp.139-167
"Implications of Korean Foreign Direct Investment in China on Its Trade Balance", 2007, Journal of Korea Trade, Vol.11, No.1, pp.1-19
“한국 수입경쟁산업 이직근로자의 특징분석”, 2011, 이홍식·박성재 공저, 한국경제연구, Vol. 29, No. 6, pp. 109-137
“DDA 무역원활화 통합협정문의 주요 의제와 쟁점”, 2011, 무역학회지, Vol.36, No.1, pp.1-24
“한국 철강산업의 대일본 및 대중국 경쟁력 분석”, 2007, 무역학회지, Vol.32, No.1, pp.263-282