Hidden Protectionism? Evidence from Non-tariff Barriers to Trade in the United States (with Christoph Moser), Journal of International Economics, vol. 117(C), p. 143-157, March 2019.
Abstract: Can the enforcement of product standards be protectionism in disguise? This paper estimates the costs of non-compliance with U.S. product standards, using a new database on U.S. import refusals from 2002 to 2014. We find that import refusals decrease exports to the United States. This trade reducing effect is driven by developing countries and by refusals without any product sample analysis, in particular during the Subprime Crisis and its aftermath. We also provide evidence that given product standards were enforced more strictly during the crisis while the quality of imported products did not deteriorate. These results are consistent with the existence of counter-cyclical, hidden protectionism due to non-tariff barriers to trade in the United States.
Export price shocks and rural labor markets: The role of labor market distortions (with Alexander Danzer), Journal of Development Economics, Volume 145, p. 1-13, June 2020.
Abstract: To what extent can workers in developing countries seize gains from trade? To answer this question we resort to a unique exogenous labor demand shock triggered by a surge in the world market price of cotton in 2010/11. By capitalizing on Tajikistan's geographic variation in the suitability for cotton production, we identify the effect of the export price hike on wages of rural workers. The shock induces agricultural firms to shift towards labor intensive cotton production. The subsequent greater labor demand doubles wages for female cotton pickers on small entrepreneurial private farms, but does not affect their wages on large para-statal farms. We present evidence that para-statal farms recruit workers for low wages based on monopsony power and expand employment based on labor coercion of children and public sector workers. Our results highlight the importance of accounting for competitive structures in local labor markets when assessing the wage pass-through of world market prices to workers in developing countries.
Working papers:
Reaching net zero while safeguarding competitiveness and social cohesion in Germany (with Marius Bickmann and Zeev Krill), 2023, OECD Economics Department Working Papers No. 1768, OECD Publishing,
Germany intends to reach climate neutrality in 2045, tripling the speed of emission reductions that was achieved between 1990 and 2019. Soaring energy prices and the need to replace Russian energy imports have amplified the urgency to act. Various policy adjustments are needed to ensure implementation and achieve the transition to net zero cost-effectively. Lengthy planning and approval procedures risk slowing the expansion of renewables, while fossil fuel subsidies and generous tax exemptions limit the effectiveness of environmental policies. Germany should continue to rely on carbon pricing as a keystone of its mitigation strategy and aim to harmonise prices across sectors and make them more predictable. Carbon prices will be more effective if complemented by well-designed sectoral regulations and subsidies, especially for boosting green R&D, expanding sustainable transport and electricity network infrastructure, and decarbonising the housing sector. Subsidies for mature technologies and specific industries should be gradually phased out. Using carbon tax revenue to compensate low-income households and improve the quality of active labour market policies would help to support growth and ensure that the transition does not weaken social cohesion.
Improving skills and employment opportunities in Tunisia (with Steven Cassimon), 2022, OECD Economics Department Working Papers, No. 1727, OECD Publishing.
Unemployment rates have been persistently high, particularly for young labour market entrants. Rising access to education has increased the supply of high-skilled labour, but the private sector has mainly created jobs in low-skill intensive and low-productivity activities, leading to high unemployment rates among tertiary graduates and particularly for women. Moreover, education and professional training systems operate in isolation from labour market needs and do not equip workers with the skills demanded by firms. Labour market policies and regulations discourage formal job creation and complicate the matching process in the labour market. To foster business dynamism and innovation and create more and better jobs, it is crucial to lower regulatory barriers to market entry and entrepreneurship, raise the international integration of domestic firms and adjust labour taxes. The quality of education and professional training needs to improve, and more cooperation with the private sector is necessary to better prepare youth and young adults for the labour market. Better targeting of active labour market policies and reducing barriers to labour mobility are key to improve labour market matching.
This working paper relates to OECD Economic Surveys: Tunisia 2022.
Mastering the transition: A synthetic literature review of trade adaptation policies (with Jens Arnold), 2022, OECD Economics Department Working Papers, No. 1719, OECD Publishing.
International trade has supported economic convergence and poverty reductions in many emerging market economies. Nonetheless, there are significant challenges during the transition towards a more open economy. Reallocations of resources and structural change are one key source of aggregate productivity improvements, but they will come with adjustment costs. Less competitive firms and sectors may decline, while more competitive sectors will have to adapt and seize new opportunities from trade and global value chains. Some workers will move to more productive firms, change occupations, sectors or even location. Non-trade policies can help to smooth these challenges and support workers seize new opportunities. This paper reviews the existing literature on how policy reforms have managed to support structural change of economies.
Raising productivity through structural reform in Brazil (with Jens Arnold), 2021, OECD Economics Department Working Papers, No. 1660, OECD Publishing.
The recovery from the current deep recession caused by the COVID-19 pandemic will require raising productivity through structural reforms. This implies a number of challenges for economic policies. With large parts of the economy shielded from competition, firms face weak incentives to become more productive. Sizeable shares of labour and capital are trapped in low-productivity firms that survive on the back of support from distortive policies. Reallocation mechanisms such as continuous firm entry, exit or the growth of stronger firms on the expense of less productive ones appear weaker than elsewhere. Domestic regulatory burdens and market entry barriers are high, reducing domestic competitive pressures. External competition is hampered by high trade barriers that have precluded Brazil from the opportunities that an increasingly integrated world economy can offer. A fragmented tax system gives rise to one of the world’s highest tax compliance costs and a wide array of exemptions and special regimes reduces fairness and the redistribution effect of taxes. Financial markets used to be dominated by directed credit, but thanks to a successful policy reform that aligned directed lending rates with market rates, they are now undergoing a profound transformation. Challenges in contract enforcement suggest scope for changes in the organisation of the judiciary to reduce judicial uncertainty and reduce trial durations.
Improving skills to harness the benefits of a more open economy in Brazil (with Jens Arnold, Matheus Bueno and Priscilla Fialho), 2021, OECD Economics Department Working Papers, No. 1661, OECD Publishing.
As Brazil is significantly less integrated into international trade than other emerging market economies, opening up to trade has significant potential to create jobs that are more productive and better paid. At the same time, this will be associated with structural changes and adjustment costs. Some workers are required to move to more productive firms, change occupations, sectors or even location. In particular, low-skilled workers need to upgrade their skills to move into newly created medium-skilled jobs in expanding firms and sectors. Workers who stay in their jobs will face similar challenges as firms upgrade production processes towards more advanced technologies. Well-designed and well-funded training and adult education policies, combined with effective social protection and employment services, can go a long way to mitigate adjustment costs for low-skilled, unemployed and informal workers. Evidence suggests that training policies can make a real difference, provided that its content is aligned with skill demands in local labour markets. Moreover, the education system plays a fundamental role for preparing current and future generations for the challenges that international integration and rising digitalisation will bring about.
The previous two working papers relate to OECD Economic Surveys: Brazil 2020
Fostering Argentina’s integration into the world economy (with Jens Arnold), 2019, OECD Economics Department Working Papers, No. 1572, OECD Publishing.
Ever since the early 20th century, Argentina has failed to fully reap the benefits that integrating into the world economy can offer. With exports and imports only accounting for less than 30% of GDP, Argentina is significantly less integrated into the world economy than other emerging market economies. This reflects several decades of inward oriented policies including a strategy of industrialisation through import substitution. Trading little, Argentina has also remained on the side-lines of global value chains, all of which represents significant lost opportunities for growth and well-being. This paper, based on a chapter in the 2019 Economic Survey of Argentina, analyses the potential benefits and distributional effects of a stronger integration into the global economy. It also discusses policy options for opening up and for accompanying policies to ease the transition towards a more open economy.
This Working Paper relates to OECD Economic Surveys: Argentina 2019
Occupational mobility, skills and training needs (with Nagui Bechichi, Stephanie Jamet, Gustave Kenedi and Mariagrazia Squicciarini), OECD Science, Technology and Innovation Policy Papers, April 2019, No. 70, OECD Publishing, Paris.
This work investigates how education and training policies may facilitate occupational transitions. It proposes a methodology to estimate cognitive and task-based skill distances across occupation. It identifies the occupational transitions that can occur upon small (of up to 6 months), moderate (up to 1 year) or important (up to 3 years) (re)training spells. “Possible” transitions, i.e. transitions implying reasonable upskilling needs and similar knowledge areas, are distinguished from “acceptable” occupations, i.e. possible transitions entailing limited loss of human capital and income, if any. Possible and acceptable transitions exist for the quasi-totality of occupations, when up to one year of training is considered. Low-skilled occupations display fewer acceptable transitions and generally require higher cognitive or task-based skills. Transitions for many high-skilled occupations entail important wage decreases or skills excesses. Acceptable transitions for occupations at high-risk of automation are harder to find, and tend to require cognitive and task-based skills-related training.
Moving between jobs: An Analysis of Occupation Distances and Skill Needs (with Nagui Bechichi, Stephanie Jamet and Mariagrazia Squicciarini), OECD Science, Technology and Innovation Policy Papers, June 2018, No. 52, OECD Publishing, Paris.
Digitalisation is changing the demand for jobs and the task content of occupations, through e.g. the increased penetration of information and communication technologies and automation. Such a transformation requires workers to be increasingly flexible, to adapt to the performance of new or different tasks, and to be increasingly mobile across occupations, as ‘old’ jobs disappear. Evaluating the costs and opportunities of (re)training and or up-skilling workers to help them move within and across occupations thus becomes key for the design of policies aiming to smooth such transitions and to foster employment and well-being. To this end, this work assesses the distance in terms of skills and tasks content for 127 occupations using the novel approach of Nedelkoska et al. (2015), with distances measured in terms of years of additional education needed for workers to adapt to the multidimensional skill requirements of the new job. It also explores the specific (re)training policies needed to prepare workers for the task-content of the new job(s).
Which Skills for the Digital Era? Returns to Skills Analysis (with Luca Marcolin, The Linh Bao Nguyen and Mariagrazia Squicciarini), OECD Science, Technology and Industry Working Papers, No. 2018/09, OECD Publishing, Paris.
This paper sheds light on the extent to which different types of skills are rewarded as industries go digital. It relies on information from the OECD Survey of Adult Skills on labour market participation and workers’ skills for 31 countries as well as on a novel OECD index on the digital penetration of industries. It investigates how cognitive and non-cognitive skills are rewarded in digital vs. less digital intensive industries and assesses the extent to which skills bundles matter. The results indicate that digital intensive industries especially reward workers having relatively higher levels of self-organisation and advanced numeracy skills. Moreover, for workers in digital intensive industries, bundles of skills are particularly important: workers endowed with a high level of numeracy skills receive an additional wage premium, if they also show high levels of self-organisation or managing and communication skills.
Having the right Mix: The Role of Skill Bundles for Comparative Advantage and Industry performance in Global Value Chains (with Stephanie Jamet, Margarita Kalamova & Mariagrazia Squicciarini), OECD Science, Technology and Industry Working Papers, No. 2017/03, OECD Publishing, Paris.
Abstract: This study investigates the role of countries’ skills endowment for comparative advantage. It tests the theoretical model of Ohnsorge and Trefler (2007) who argue that it is the bundling of various skills at the worker level and their joint distribution that matter for trade specialisation. This departs from the literature assuming that workers are endowed with only one type of skills, generally measured by educational attainment. The model’s predictions are tested using information on cognitive skills from the Survey of Adult Skills (PIAAC) and Trade in Value Added (TiVA) data. Results show that workers' skills bundles and their distribution have larger effects on specialisation than countries’ endowment of capital per employee, or the relative endowment of workers possessing different levels of education. Furthermore, this study tests the model of Bombardini et al. (2012) and finds evidence that the within-country dispersion of skills significantly affects specialisation patterns.
Skills and Global Value Chains: A Characterisation (with Stephanie Jamet, Margarita Kalamova, François Keslair & Mariagrazia Squicciarini), OECD Science, Technology and Industry Working Papers, No. 2017/05, OECD Publishing, Paris.
Abstract: This study follows a job task-based approach to measure the skills of individuals. It exploits information contained in the OECD Survey of Adult Skills (PIAAC) and conducts an exploratory state-of-the-art factor analysis to obtain six task-based skills indicators that are comparable across 31 countries. By combining the PIAAC-based skills indicators with OECD Trade in Value Added (TiVA) data, light is shed on the way skills and their distributions (at the country-industry level) relate to industry performance and to integration into global value chains (GVCs). The results underline the importance of cognitive skills such as literacy, numeracy and problem solving for any industry to thrive in the global economy. Also, a persistent and positive association with labour productivity and participation in GVCs is observed, at the industry level, for non-cognitive skills such as managing and communication skills, ICT skills and workers’ readiness to learn and to think creatively.
Work in Progress
The economic and distributional consequences of carbon emission abatement for Germany – A computable general equilibrium analysis (with Marius Bickmann and Christoph Boehringer)
Abstract: This study uses a multi-country and multi-sector computable general equilibrium model to assess the economic impacts of different policy scenarios of emission abatement for Germany. Policy scenarios combine carbon pricing with additional regulatory measures to reach EU Fit For 55 climate targets and account for different forms of revenue recycling from emission pricing. The study investigates the effects of these scenarios on sectoral performance and factor remuneration, taking into account international market responses and emission abatement in non-EU countries. It further analyses the distributional effects of policy scenarios across heterogenous households, using micro-simulations based on household survey data, as well as across German Länder. Reaching EU Fit for 55 targets reduces GDP and real consumption, although many manufacturing sectors can pass on part of the costs to consumers in other countries due substantial market power in export markets. Nevertheless, policy design can significantly mitigate negative effects on the competitiveness of manufacturing industries or the welfare of different households. Simulation results show that a carbon tariff does not preserve the competitiveness of German manufacturing to the same extent as existing generous subsidy schemes, due to the sector’s strong integration in global value chains. Expanding the sectoral coverage of the ETS improves household welfare but hurts energy-intensive and trade-exposed industries (EITE). In contrast, using carbon tax revenues to raise subsidies for renewable energy causes welfare losses and raises emissions in other sectors and EU countries, but helps to mitigate the negative effects of emission abatement on EITE industries. Recycling carbon tax revenues as a lump sum to households significantly reduces the regressive effects of emission abatement. On the Länder level, economic losses are most pronounced in East Germany, where fossil fuel-based energy supply and mining account for a high share in regional gross value added.
The social cost of the green transition: Estimating job displacement effects in carbon-intensive sectors (with Cesar Barreto and Zeev Krill)
Abstract: The green transformation of the economy is expected to lead to a sharp reduction in employment in carbon-intensive industries. For designing policies to support displaced workers, it is crucial to better understand the cost of job loss, whether there are specific effects of being displaced from a carbon-intensive sector and which workers are most at risk. By using German administrative labour market data and focussing on mass layoff events, we estimate the cost of involuntary job displacement for workers in high carbon-intensity sectors and compare it with the displacement costs for workers in low carbon-intensity sectors. We find that displaced workers from high carbon-intensity sectors have, on average, higher earnings losses and face stronger difficulties to find a new job and recover their earnings. Differences in worker and establishment characteristics explain most of the gap. Moreover, we find that workers displaced in high carbon-intensity sectors experience more significant losses in firm wage premiums, have a higher probability to switch occupations and sectors, and are slightly more likely to change workplace districts after displacement. Women, older workers and those with vocational degrees as well as workers in East Germany, experience particularly high costs in case of job loss.
The ageing of the German growth model – the importance of migration for safeguarding competitiveness (with Marius Bickmann and Donal Smith)
Abstract: This study uses the OECD METRO model to analyse the consequences of global demographic change and migration on the structure of the German economy. The projected shrinking of the working age population decreases GDP noticeably until 2030, and German manufacturing sectors experience a strong deterioration of their position on global export markets. However, if net migration inflows increase moderately compared to the average over 2010-2019, particularly regarding workers with VET degrees, the negative effects of population ageing on the competitiveness of German manufacturing sectors can be reduced to a large extent.
Brazils’ trade liberalisation of the 1990s revisited: How targeted training can reduce adjustment costs for workers (with Jens Arnold, Matheus Bueno and Priscilla Fialho)
Abstract: Using administrative labour market data from Brazil for the years 1985-2015, we investigate how the trade liberalization of the 1990s has affected employment outcomes and firm dynamics in local labour markets. We find that although employment growth is weaker in regions more exposed to trade liberalization, firm entry and exit rates as well as turnover increase. The average size of entering firms rises, the one of incumbents decreases, and real wages grow, signalling that trade opening invigorates the forces of creative destruction. Especially low skilled workers suffer from employment losses; the share of medium skilled jobs expands the most. Combining our dataset with data from a large-scale training program, we find that training which is targeted to local skill demands mitigates the negative employment effect of trade opening. This effect is largest for medium skilled jobs, indicating that training should be well targeted to low skilled workers to help them acquiring the necessary skills to find new jobs.
Transitory Income Shocks and Household Behavior: Impacts of a Cotton Export Price Surge on Rural Households in Tajikistan
Abstract: How do short run income fluctuations due to trade openness affect the behavior of poor households in developing countries? Although important parts of the population in developing countries are strongly exposed to income risk caused by world price fluctuations, the literature has, thus far, mainly focused on how households in developing countries deal with income risk induced by weather shocks or illness (Wolpin 1982, Paxson 1992, Gertler and Gruber 2002). This paper contributes to the literature by exploiting an exogenous surge in the world market price of cotton to investigate its effect on consumption and investment decisions of rural households in a developing country, namely Tajikistan. I find that in reaction to the positive income shock households strongly increase investments in education and health of family members as well as into entrepreneurial activity and migration. Food consumption also increases, which indicates that Tajik households cannot fully insure against transitory income shocks. I also find evidence that households increase expenditures for marriages, i.e. they invest in creating, stabilizing and extending social relationships that work as an insurance mechanism in lean times (Grimard 1997).
Policy Publications
OECD Economic Surveys: Germany 2023 (with Zeev Krill and Marius Bickmann), 2023, OECD Publishing, Paris.
OECD Economic Surveys: Tunisia 2022 (with Andrea Goldstein), 2022, OECD Publishing, Paris.
Multi-dimensional Review of the Dominican Republic (with other authors), 2022, OECD Publishing, Paris.
OECD Economic Surveys: Brazil 2020 (with Jens Arnold), 2020, OECD Publishing, Paris.
OECD Economic Surveys: Argentina 2019 (with Jens Arnold), 2019, OECD Publishing, Paris.
OECD Skills Outlook 2019: Thriving in a Digital World (with other authors), 2019, OECD Publishing, Paris.
The gender wage gap in the digital era: The role of skills (with other authors), in: Taking Stock: Data and Evidence on Gender Digital Equality, Equals Research Group Report, United Nations University 2019.
Bridging the digital gender divide – Include, Up-skill, Innovate (with other authors), 2018, OECD Publishing, Paris.
Towards the implementation of the G20 roadmap for digitalisation: skills, business dynamics and competition (with other authors), 2018, OECD Publishing, Paris.
OECD Science, Technology and Industry Scoreboard 2017 (with other authors), 2017, OECD Publishing, Paris.
OECD Skills Outlook 2017: Skills and Global Value Chains (with other authors), 2017, OECD Publishing, Paris.
Evidence of hidden protectionism in the US in the Great Recession (with Christoph Moser), VOX CEPR's Policy Portal, 2 June 2016.
Estimating the effects of United States food safety and agricultural health standards on agro-food exports from Latin America and the Caribbean (with Raquel Artecona), UN – ECLAC Studies and Perspectives series – Washington – No. 11, October 2010.
The economic and social consequences of agricultural export taxes: A CGE – analysis for Argentina (with Federico Foders), Conference Paper, presented at the 13th Annual GTAP Conference on Global Economic Analysis, Penang, Malaysia, June 9-11, 2010.
Exportsteuern in Argentinien: Fluch oder Segen? (with Federico Foders), Orientierungen zur Wirtschafts- und Gesellschaftspolitik 124, Juni 2010, p. 35 - 39.
Acerca de la necesidad de un nuevo régimen de relaciones fiscales entre las Provincias y el Nivel Nacional en Argentina, published on the website of the Institute for Economics and Finance (IEF), National University of Córdoba, Argentina, 2005.