GRAVITY MODELING

USITC Gravity Modeling Portal (gravity.usitc.gov)

The USITC Gravity Modeling Environment is an ongoing project aimed at developing and releasing to public a number of datasets and a toolkit for gravity modeling and research.

• • Data

    • Domestic and International Common Language Database

    • Dynamic Gravity Dataset

    • International Trade and Production Database for Estimation

  • Estimation

  • Simulation

RESEARCH

Working Papers

• Trade Policy and Gender: Examination of Gender and Sector-Specific Outcomes, (2021). USITC Office of Economics Working Paper 2021-07-A, with David Riker and Marinos Tsigas.

This paper assesses the economic impact of U.S. trade agreements implemented from 1984 to 2014 on U.S. labor markets for male and female workers. The main challenge in retrospective analysis, such as undertaken in this paper, is to disentangle the impact of the trade agreements from the many changes in economic conditions that coincided with the implementation of the agreements. This paper combines an econometric model of trade with the GTAP CGE simulation model to estimate the impact of the bilateral and regional agreements on sector-level bilateral trade in goods and services. This paper builds on earlier work by the U.S. International Trade Commission. In particular, the U.S. input-output statistics are expanded to identify employment by sector for female and male workers. Those employment statistics are obtained from the Current Population Survey (CPS). The paper finds that the U.S. trade agreements have generally benefited the American workers and that women benefited more than men, both in terms of wages and employment.

• One Nation, One Language? Domestic Language Diversity, Trade and Welfare, (2021). USITC Office of Economics Working Paper 2021-01-B, with Peter Herman, Farid Toubal, and Yoto V. Yotov.

Using new data on linguistic diversity across and within countries, we examine novel channels through which language affects trade patterns and economic welfare. We find that linguistic similarity within a country accounts for about 10 percent of estimated 'home bias', demonstrating the importance of shared languages for domestic integration. To highlight the general equilibrium implications of domestic language proximity, we simulate the repeal of Quebec's Bill 101, which made French an official language in Canada and established fundamental language rights for French-speakers. The analysis demonstrates that domestic language diversity has significant implications for Canada's welfare but also sizable economic consequences that stretch far beyond its borders.

• Exporting and Gender Earnings Differentials in the U.S. Manufacturing Sector, (2018). USITC Office of Economics Working Paper 2018-11-A, with David Riker.

We analyze weekly earnings data for approximately 17,000 women and men who worked in the U.S. manufacturing sector in 2016. We estimate the earnings premium in export-intensive industries, based on an econometric analysis that combines worker-level data on earnings, education, occupation, location, and other demographic characteristics from the Current Population Survey with industry-level data on the exports and the total shipments of U.S. manufacturing industries. The estimates indicate that export-intensive industries pay more on average, and that the export earnings premium is larger for female workers, who earned a 21.3% premium in export-intensive industries, than for male workers, who earned an 12.1% premium in export-intensive industries.

• Gender and Income Inequality in United States Tariff Burden, (2018). USITC Office of Economics Working Paper 2018-08-B, with Arthur Gailes, Serge Shikher, and Marinos Tsigas.

The combination of different tariff rates across products and different consumption patterns across households results in different tariff burdens across consumer groups. We investigate the distribution of tariff burden among U.S. households of different incomes and consumers of different genders. As a share of total household consumption expenditure in 2015, the tariff burden was a nearly constant 0.25 percent across all income deciles, meaning that tariffs act as a flat consumption tax. Since a flat consumption tax is a regressive tax on income, tariffs fall disproportionately on the poor. Across genders, we find large differences in tariff burden. Focusing on apparel products, which were responsible for about 75% of the total tariff burden on U.S. households, we find that the majority, 66%, of the tariff burden was from women's apparel products. In 2015, the tariff burden for U.S. households on women's apparel was $2.77 billion more than on men's clothing. This gender gap grew about 11% in real terms between 2006 and 2016.

• The Dynamic Gravity Dataset: 1948-2016, (2018). USITC Office of Economics Working Paper 2018-02-A, with Peter Herman

The estimation of gravity models of international trade extensively relies on the availability of unilateral and bilateral, country pair measures of theoretical determinants of trade. Existing datasets provide a wealth of information, but often come short in terms of temporal and other forms of variation. This paper presents a recently developed Dynamic Gravity dataset that improves upon existing gravity datasets by including additional variables of interest and featuring greater variation for use in econometric analysis. We describe the dataset and highlight the key differences between our Dynamic Gravity dataset and the datasets often used by researchers previously. Analytical comparisons are included that demonstrate important similarities and differences through summary statistics and estimates of sample gravity models using the Dynamic Gravity dataset and two alternative data sources: the CEPII gravity database constructed by Head et al. (2010) and the Rose (2004) dataset. We find that the Dynamic Gravity dataset is nearly indistinguishable from the other sources and produces results consistent with international trade theory. However, in some cases, it produces results that are qualitatively similar but quantitatively different from the others, which we take as support that our attempts to improve on past datasets have succeeded.

• The Effects of Internal Migration on Health of Adults in Indonesia, (2017). USITC Office of Economics Working Paper 2017-05-B, with Partha Deb

In this paper we quantify effect of migration on health using a potential outcomes framework design that exploits exogenous impacts of floods on migration. We focus on six often-used measurements of physical and general health that are potentially modifiable over short periods of time. We construct a latent class model of the joint probabilities of the six health measures in which individuals are assumed to belong to one of a small number of (latent) health-types or classes. The class probabilities are modeled as being individual-specific. We estimate the model using data from the Indonesian Family Life Survey, an ongoing longitudinal survey of households and individuals in Indonesia. We find that migration last year has no effect on health, and that individuals who migrated two or more years ago as a result of a flood are 20 percent more likely to be in poor health than their non-migrant counterparts.

• Extending the CEPII Gravity Data Set, (2017). USITC Economics Working Paper 2017-01-A, with Peter Herman, Serge Shikher, and Ricky Ubee

This research note describes in detail the process and data sources used in the CEPII gravity data set update for the years 2007 to 2015. This data update preserves the nomenclature and the structure of the original CEPII data for easier integration into ongoing studies.

Work in Progress

• Cross-Industry Earnings Differentials, with Serge Shikher and Benjamin Stutts

• Infrastructure and Trade, with Saad Ahmad, Peter Herman, and Serge Shikher

• Gravity Modeling Environment, with Saad Ahmad, Peter Herman, and Serge Shikher

• Threat and Imposition of Trade Sanctions, with Peter Herman and Jeffrey Horowitz