Research

Working Papers


Abstract: A large and growing literature focuses on product quality differentiation and its positive and normative importance for international trade. In this literature, there are a number of approaches that indirectly infer product quality based on product price and quantity data. I propose a simple test for the robustness of commonly used approaches to quality inference: when purchasing goods from a common set of exporters, do two importers agree on which goods are high quality? This paper examines three most applied approaches (unit value, demand residuals derived from a CES model, and demand residuals derived from an augmented nested logit framework) and calculates the inferred quality of each exporter-product from the perspective of multiple importers. Results from Spearman's rank correlation tests show that unit values are the most consistent quality measure. Somewhat paradoxically, using additional variables suggested by theory, including import quantity and other controls, worsens the agreement across importers. The nested logit framework generates negative rank correlations in over half the sample. I examine a number of explanations for this troubling result. 


Work in Progress

Technical Barriers to Trade and Import Quality (Draft coming soon)

Abstract: This paper studies the heterogeneous effects of Technical Barriers to Trade (TBT) on exporters in different quality segments of the market. Import quality is estimated using nested logit framework based on Berry (1994) and Khandelwal (2010). We match import data of 14 countries at HS 6-digit level to a WTO database of regular TBT notifications over the period of 1995-2010. We analyze the impact of TBT impositions on entry and exit, import quantity and import price (unit value) and focus on differential effects that depend on an exporter's position on the quality ladder. Results show that import demand rises in TBT-imposing market, but that quantity growth is greatest in the low-quality segment. In contrast, growth in unit values is greatest for imported varieties that are close to the quality frontier. Finally, imposing technical barrier shorterns quality ladders, that is compresses the apparent difference in quality between low and high end of varieties. 


Impact of Labor Market Conditions on College Major Choices: Aim Low? (Draft coming soon)
(with David Hummels, Xiaoxiao Li and Paul Thomas) 

Abstract: A growing literature emphasizes the importance of human capital investment through college education. College major choice is a dynamic decision associated with future earnings, students' abilities and economic stability. This paper studies the effect of labor market conditions on major switching behavior. We explore a rich administrative data set that covers the complete educational path of each Purdue college student. We find that students start in difficult majors with high expected mid-career earnings. Before entering the market, they are likely to switch into easier majors with high expected early-career earnings. Results from propensity score matching show that switchers stay longer in college, while there is little improvement in GPA compared to non-switchers with similar SAT scores and first-year GPA. We quantify the cost of switching and investigate the welfare effects of major switching by college.