The Interactive Effect of Immigration and Offshoring on U.S. Wages (job market paper)
We jointly analyze the effects of low-skilled immigration and offshoring on wages of American workers of different skill levels and task specializations. We show that offshoring affects native wage response to immigration and explain the likely economic mechanism responsible. Focusing on commuting zone outcomes and analyzing a period of high immigration and offshoring exposure growth, between 1990 and 2000, we find that wages of low-skilled natives increase in response to offshoring, decrease in response to low-skilled immigration, and that the wage effect of immigration becomes more negative with more offshoring. We present a theoretical model to demonstrate how this interactive effect of immigration and offshoring can come about. Specifically, we show that offshoring increases native wage elasticity in response to immigration if it increases immigrant wage share; this happens if a relatively larger share of native jobs than immigrant jobs is offshored, causing natives to shift to performing tasks in which they have lower comparative advantage and immigrants to concentrate in tasks for which they have greater comparative advantage.
Do Immigrants Promote Exports to Third Party Countries? On the Role of Geographic and Linguistic Proximity
In this paper, we investigate the scope and magnitude of a major economic contribution of immigration—export promotion. We show that immigrants’ trade facilitation effect extends beyond their countries of origin to certain third party countries—those that we term “proximate” to the country of origin. This applies to proximity measured both geographically and linguistically, based on sharing a common border and on the probability of sharing a common native language, respectively. Using state-country-industry and time variation in U.S. and partner country data on immigration and trade, we provide evidence that immigrants increase exports to geographically proximate countries (to the country of origin) even if they are not linguistically proximate, and to linguistically proximate countries even if they are not geographically proximate. The results suggest that business networks, foreign market information and communication facilitation as channels of trade promotion operate in multiple directions, and their impact may have been previously underestimated by considering only bilateral economic relations.
On the Role of Farm Size Distribution in Explaining Cross-Country Variation in Agricultural Productivity
The stylized fact of the much greater gap in agricultural labor productivity than in non-agricultural labor productivity between high-income and low-income countries is one of the major puzzles in development economics literature, as factor mobility should limit excess gap. In this paper, we seek to test one of the potential explanations that has recently emerged in the literature (Adamopoulos and Restuccia (2014)). In accordance with this hypothesis, low-income countries feature policies that distort farm size distributions towards lower mean–in particular, crop-level taxes and subsidies produce a negative correlation between nominal rate of assistance and average farm size, thereby attracting more labor to small farms away from large ones; this leads to lower average labor productivity in developing countries due to lower labor productivity on small farms and explains a large part of the agricultural labor productivity gap between the rich and poor countries. We do not find support for this hypothesis. Using data from the most extensive number of national agricultural censuses we are aware of, we first show that the relationship between tax policy and average farm size is questionable, since there has not been a negative relationship between crop level nominal rate of assistance and average farm size for the crop in lowest income quintile countries since 1995. Next, in contrast to the unconditional relationship, we do not observe a relationship between average farm size and agricultural labor productivity controlling for primary and intermediate input use, institutional quality and country-specific unobservables. Neither the marginal effects nor variance decomposition analysis findings indicate the hypothesized connection either between crop-level tax policy and average farm size or between average farm size and agricultural labor productivity. This casts doubt on the claim that crop-level taxes explain a large portion of the difference in labor productivity between low-income and high-income countries; instead, it points to a simpler explanation–non-labor input quantity and quality.
Work in Progress
1. Immigration and Offshoring Effects on Attitudes Towards Immigration.
2. Oligopsony and Agricultural Price Transmission Asymmetry.
3. Trade Liberalization and Returns to Vocational Education in India (with Tanvi Rao)