“Trade and Firm-Level Adjustments to Geopolitical Shifts: Evidence from Armenia”
Latest Version
This project is conducted within the framework of cooperation between the State Revenue Committee of Armenia and the Armenian Centre for Research in Economics.
Abstract
This paper examines how sanctions on a major trading partner impact the firms and trade of a neutral economy, using the case of Armenia and the Western sanctions on Russia as an example. I first develop a theoretical framework in the spirit of Ahn, JaeBin, Amit K. Khandelwal, and Shang-Jin Wei (2011 Journal of International Economics) model that features both direct and indirect trading firms and benefits/costs associated with sanctions. Using matched customs and employer–employee data covering 2018–2023, I document a sharp increase in Armenia’s intermediary role, with exports to Russia rising markedly, especially along pre-existing firm–product–partner relationships. Trade in sanctioned goods was disproportionately rerouted through Armenian firms, with higher values and unit values concentrated among incumbents. At the firm level, exporters and dual traders expanded turnover, while importers and intermediaries captured mark-ups rather than expanding production. At the employee level, wages in trading firms rose, but employment creation was limited, suggesting that gains accrued mainly to existing workers rather than through broad-based labor market expansion. In addition to the empirical findings, the paper presents a description of Armenia’s newly accessible administrative datasets as a valuable resource for future economic research.
“Jobless Industrialization and Trade Liberalization: Evidence from RTA Enactments”
[PDF on SSRN]
Abstract
This paper investigates whether trade liberalization has promoted industrialization over the past 30 years by using the enactments of Regional Trade Agreements (RTAs) as a proxy for trade liberalization. Leveraging panel data from 51 economies between 1990 and 2018, I employ a novel two-stage least squares estimation strategy to establish causality and address confounding factors. The findings reveal that RTAs have increased the share of manufacturing value added and output per worker, while decreasing the share of agriculture in production. Notably, these effects are not accompanied by a rise in manufacturing employment, suggesting that RTAs have promoted “jobless industrialization”—boosting manufacturing output without increasing labor in the sector. This effect is primarily driven by developed Asian and Sub-Saharan African economies, while developing Asian and Latin American economies drive the increase in manufacturing labor productivity.
“On the Anticipation Effects of Free Trade Agreements”
with [Jose De Sousa]
Abstract
Regional Trade Agreements (RTAs) have been a key policy tool for trade liberalization since the mid-20th century. The trade literature has traditionally examined their effects using gravity models that focus on the date of enactment. This paper investigates anticipation effects by distinguishing between the signature and enactment phases of RTAs. Exploiting cross-country variation in the timing of enactment, we construct a novel bilateral dataset that separately records both dates and combines them with detailed trade and tariff information. The results show that RTA signature is associated with short-term trade destruction, which is subsequently offset by trade creation once agreements are enacted. Tariffs do not systematically decline prior to enactment, and signature alone is linked to lower applied tariffs, suggesting that pre-enactment trade reductions are not driven by tariff adjustments. We interpret the negative pre-enactment effects as anticipatory behavior, whereby firms delay transactions in expectation of lower trade costs after the agreement enters into force.
“Occupational Routineness and Migration response to Mass Layoffs”
Abstract
Persistent earnings differences between observationally identical workers across locations arise not only from migration costs but also from occupational switching frictions and regional differences in job opportunities. Overlooking these occupational barriers leads to overestimating the true costs of geographical mobility. Exploiting mass layoffs in France (2003--2019), I show that regional reallocation is strongly shaped by the occupational composition of origin and destination regions: workers move toward areas with better occupational matches, while limited local opportunities restrict mobility. Earnings losses following displacement are concentrated among workers in lower-skill, non-routine occupations and remain highly persistent, reflecting restricted post-displacement opportunity sets. These patterns are especially pronounced among workers in routine-intensive occupations, who display higher occupational mobility but lower geographic mobility, and incur relatively smaller wage losses on impact yet face slower long-run recovery due to the collapse of local routine labor demand and the limited portability of routine-specific human capital.