In a heterogeneous-firm model with oligopsonistic local labor markets, this paper shows that opening up to trade can affect distortion in such markets. The distortion arises because firms are large and able to exercise market power over their local workers. Using a panel dataset of Chinese manufacturing firms from 1998-2007, I measure firm-level labor market distortion and examine their evolution following China's trade policy reform in 2001. I find that labor market distortion is pervasive and the trade policy reform has led to a net reduction of the distortion in China's manufacturing sector, with a larger and significant effect working through the liberalization of input tariffs.

Paper presented at (*=scheduled): University of Oregon, SEA 91st Annual Meeting, EIIT (Purdue), McGill University, 5th IZA/World Bank/NJD/UNU-WIDER Jobs and Development Conference, 2021 Australasian Meeting of the Econometric Society, 2021 North American Summer Meeting of the Econometric Society, 2021 Canadian Economics Association, 2020 European Winter Meeting of the Econometric Society, Oregon State University, University of Auckland, Competition Dynamics, Midwest Trade Conference (Indiana), Trade Breakfast & Applied Micro (Syracuse)

This paper studies two novel productivity characteristics of foreign acquisition on high-tech manufacturing firms: the dynamic and the non-Hicks-neutral effects. A dynamic productivity effect of foreign ownership arises when adoption of foreign technology and management practices takes time to fully realize. Furthermore, these dynamic adjustments may be capital or labor augmenting as adoption of advanced production technologies tends to have non-neutral productivity implications in developed countries. We propose and implement an econometric framework to estimate both effects using firm-level data from China's manufacturing sector. Our framework extends the nonparametric productivity framework developed by Gandhi, Navarro and Rivers (2020), in which identification is achieved using a firm's first-order conditions and timing assumptions. We find strong evidence of dynamic and non-neutral effects from foreign ownership, with significant differences across investment sources. Investment from OECD sources is found to provide a long-term productivity boost for all but the largest recipients, while that from Hong Kong, Macau and Taiwan does not raise performance. These findings have implications for China's declining labor share and for the rising domestic value-added content of its high-tech exports.

Paper presented at: 5th InsTED (Syracuse U), Comparative Analysis of Enterprise Data (U of Michigan), Trade Breakfast & Applied Micro (Syracuse U)

This paper examines the effect of an export shock on the firm-level labor market power distortion. Using a nonparametric production function approach, we measure distortionary wedges between equilibrium marginal revenue products of labor (MRPL) and wages for Vietnamese manufacturers from 2000 to 2010. We find that the median firm pays workers roughly 59% of their MRPL. Following the US-Vietnam Bilateral Trade Agreement (BTA), which significantly reduced US tariffs for Vietnamese goods, firms in industries exposed more to the tariff reductions saw faster employment growth and faster declines in their MRPL-wage distortionary wedge. We find that the BTA permanently decreases the labor market distortion in manufacturing by 3.4%, and the effect concentrates on domestic private firms with the magnitude of 4.9%. We then exploit information on the gender composition of employment to estimate the MRPL-wage wedges separately for men and women. We find that the median distortion is 26% higher for women relative to men, and the declining distortion for women, amounting to more than 12%, is the main force driving the reduction in overall labor market distortion attributable to the BTA. The entry of FDI firms following the BTA explains a significant part of these results.

Paper presented at (*=scheduled): 2024 Winter Meeting of the Econometric Society, Women in International Economics Conference (Rochester), IADB, Northwest Development Workshop 2023 (University of Oregon), Syracuse University, 2022 WEAI (Portland, OR),   2022 PNW Labor Day Workshop, University of Tokyo, Colorado State University, Portland State University

Using eight rounds of the Vietnam Household Living Standards Surveys (VHLSSs) spanning 16 years and exploiting the US-Vietnam Bilateral Trade Agreement (BTA) in 2001 as a large export shock, we investigate the impact of an export market expansion on intergenerational occupational mobility in Vietnam. Our analysis suggests that the BTA has led to greater upward absolute occupational mobility among sons and daughters in their 20s. However, relative occupational mobility, inversely related to the gradient of the child's occupational rank as a function of the parent's, decreases as a result of the BTA. Our results suggest that the BTA improves occupational mobility for an average child in younger age groups but more so for a child born to top-ranked parents. We also find that the BTA increases human capital, especially college education for sons and daughters and vocational training only for sons. Furthermore, higher individual and initial province-level human capital facilitates occupational mobility through the BTA.

Paper presented at (*=scheduled): 2024 Trade and Uneven Development Conference (World Bank, Washington, D.C.)*, 2022 Australasian Trade Workshop (University of Canterbury, NZ), University of Virginia, SEA 91st Annual Meeting, 5th IZA/World Bank/NJD/UNU-WIDER Jobs and Development Conference, 2021 Canadian Economics Association, 2021 North American Winter Meeting of the Econometric Society, 6th InsTED (Nottingham)

Labor market imperfections are inherent attributes of labor markets. Dating back to a century ago when Robinson (1933) first mentioned the concept of monopsony (meaning single buyer), economists had applied it to labor markets, but it was never a mainstream concept. Recent labor economics literature revives this concept and empirically documents that firms possess significant monopsony power in many markets and countries. Meanwhile, international trade economists have started to incorporate labor market imperfections, in the form of monopsony or oligopsony, into trade models. This essay reviews recent theoretical and empirical developments in the interconnection between international trade and labor market imperfections. In doing so, I will focus on different assumptions being made about the nature of the imperfections and the empirical approach to quantifying them. I will also highlight some contributions, drawbacks, and potential paths forward for this newer literature.

More than 20 years after the Asian financial crisis, the region's continued high reliance on United States (US) dollar-denominated funding has significant implications for the transmission of global financial conditions to domestic financial and macroeconomic circumstances. Given limited domestic capital market-based financing solutions, a high reliance on funding denominated in US dollars renders countries vulnerable to changing global financial and liquidity conditions. Using a dynamic panel and a vector autoregression model to assess the exchange rate as a possible transmission channel, we find that changes in bilateral US dollar exchange rates can have a significant impact on sovereign credit risk. In particular, a depreciation of the domestic currency against the US dollar leads to a widening of the sovereign bond spread. This finding suggests a significant relationship between US dollar funding exposure, US dollar liquidity conditions, and domestic financial conditions in some emerging Asian economies, and thus highlights one source of structural vulnerability. Given that the magnitude of the effects varies across countries, policy makers need to monitor closely the interplay between the exchange rates and local financial market conditions with tailored prescriptions for domestic financial resilience. 

Presentations: 2021 South East Asian Central Banks (SEACEN) Policy Summit , Asian Development Bank