John Chung

I am an assistant professor at the Auburn University economics department.

My main research interest is international trade — What are the determinants and consequences of trade?

You can download my 📄CV here and read about my ongoing projects below.

While the standard trade models explain observed firm heterogeneity with variance in firms’ innate productivity, discriminatory policies and political connections in China also affect the firm size and generate resource misallocation across firms. In this paper, I show that productivity heterogeneity alone has difficulty explaining the observed firm-level patterns in the Chinese manufacturing sector. I document that larger firms exhibit lower average revenue productivity, revenue productivity variance is high conditional on firm size, and larger exporters exhibit lower export intensity. Introducing firm-level misallocation can help reconcile these facts and doing so matters for estimating the gains from trade. The misallocation model predicts the size of gains from trade that is 45% lower than the standard model predicts when both models are calibrated with the same Chinese manufacturing data. The result suggests that accounting for firm-level heterogeneity in dimensions other than productivity is important when estimating the gains from trade.

How do countries specialize along a global value chain (GVC)? Theory suggests more productive and centrally located countries specialize in more downstream stages where the costs of production errors and shipping are higher. I examine these predictions empirically by looking at the 2012-2019 trade data. Looking at the input and final products within a sector, I find some support for the predictions in the electronics and vehicles sectors. However, in the apparel sector, more productive and central countries specialize in more upstream input products rather than downstream final products. The pattern holds even after accounting for other known significant sources of comparative advantages. Examining manufacturing sectors reveals that the apparel sector is not an outlier. More productive countries, and to a lesser degree more centrally located countries, specialize in more upstream sectors, controlling for the roles of factor endowments and institutional qualities. These results suggest the need for a more nuanced understanding of how countries position on a GVC.

We examine the impact of industrial robots on US labor markets between 2005 and 2016. By analyzing the 5-year intervals within this period, we find that robot exposure reduces employment in the earlier periods but augments employment in the more recent periods. Similarly, the effect of robot exposure on the average wage is initially negative but gradually becomes positive in more recent years. The evolving impact of robots is primarily driven by robot-intensive sectors, consistent with robot deepening and the increasing adoption of collaborative robots. We also find evidence of spillover effects on industries outside of manufacturing.

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We examine the gains from trade in the presence of firm heterogeneity and resource misallocation. Theoretically, we show that measured domestic aggregate productivity (Φ) captures the effective productive capacity of an economy with or without distortions. However, it is generally not monotonic with welfare (W), which depends on the degree of misallocation and the prices of both domestic and imported varieties. Under allocative efficiency, bilateral and export liberalizations increase W and Φ, but import liberalization has ambiguous effects. Misallocation can amplify, dampen or reverse these gains from trade. Empirically, we then use unique new data on 14 European countries and 20 industries in 1998-2011, and establish that exogenous rises in export demand and import competition both increased Φ in this sample. Further empirical analysis suggests that these effects operated through reallocations across firms in the presence of distortions, with important asymmetries between export and import shocks: (i) Both export and import expansion increased effective average firm productivity, but the former also shifted activity towards firms with higher effective productivity, while the latter acted in reverse. (ii) Both trade shocks increased minimum effective firm productivity, but the latter was not a sufficient statistic for Φ. (iii) Efficient institutions, factor and product markets amplified the gains from import competition, but dampened those from export access.