Presented at: FIW International Economics Conference 2023, Midwest Trade Conference Spring 2023, CIREQ PhD Students' Conference 2023, CEA Conference 2023, ETSG Conference 2023, NOeG Conference 2023, Vienna Macro Café 2023
Abstract: Consumer preference data is being gathered at an accelerating pace. Firms leverage this market-specific information to enhance productivity, and access to this data may significantly influence their decisions when entering new export markets. We introduce a model of exporting that incorporates a productivity-enhancing data mechanism and analyse the equilibrium effects on the distribution of productivity, selection into exporting and data acquisition. We test these predictions using empirical data. Our theoretical findings indicate that heightened data restrictions have a dual impact: they reduce the amount of data acquired by foreign firms entering the market, while simultaneously driving up prices. Additionally, we find that allowing firms to access data results in stricter selection into exporting. Empirically, we find support for a reduction in trade flow between countries where the destination has higher data protection measures in place. This effect is more pronounced for manufacturing industries that heavily rely on market-specific adaptations of their products.
Presented at: FIW International Economics Conference 2024
Abstract: Migration plays a crucial role in circumventing trade barriers and, consequently, overcoming multilateral resistance by reducing information asymmetries. In this paper, we analyse the extent to which the skill level of migrants influences such trade factors. We develop a tractable model of international trade, adjusting for firm-level heterogeneity in worker's skill level. This approach enables us to establish a gravity model explicitly incorporating high-skilled in-migration as a means to reduce iceberg costs. We then test this hypothesis by estimating the structural gravity equation directly with PPML with a full set of fixed effects, allowing to control for the universe of potential multilateral resistances. Our analysis reveals a significant impact of migration on trade flows, and this impact is directly proportional to the skill level, thereby providing empirical support for our theoretical findings.
