Working Papers
Trade Liberalization and the Great Labor Reallocation
Latest Version (3/2017)
Awarded the RoWE Prize for young economists at the 18th European Trade Study Group (ETSG) Annual Conference.
The extent to which a country can benefit from trade openness crucially depends on its ease of reallocating resources. However, we know little about the role of domestic frictions in shaping the effects of trade policies. I address this question by analyzing the impact of tariff reductions on the spatial allocation of labor in China, and how this impact depends on migration frictions that stem from China's household registration system (hukou). I first provide reduced-form evidence that input trade liberalization has induced significant spatial labor reallocation in China, with a stronger effect in regions with less hukou frictions. Then, I construct and estimate a quantitative spatial model with input-output linkages and hukou frictions to examine the general equilibrium effects of tariff reductions and perform counterfactuals. The quantitative exercise shows that trade liberalization increases China's welfare by 0.63%. Abolishing the hukou system leads to a direct welfare improvement of 1.51%. Additionally, it increases gains from tariff reductions by 2% and alleviates its negative distributional consequences. In this process, I develop a novel measure of migration frictions associated with the hukou system.
Trade Costs, Global Value Chains and Economic Development
Latest Version (5/2017)
Revise and Resubmit, Journal of Economic Geography
This paper develops a model to study the impact of trade costs on developing countries’ industrialization when sequential production is networked in global value chains (GVCs). In a two-country setting, a decrease in trade costs of intermediates is associated with South joining and moving up the value chain and both North and South experiencing welfare improvement. As trade costs further decrease, the wage gap between North and South first increases and then decreases. Extending the model to a multi-country setting, I show that reduced trade frictions lead South countries to join GVCs due to wage differentials and low trade costs. This increases the wage in North but may decrease the wages of South nations that are already part of the network. Moreover, South nations that join tend to be regionally clustered. The model provides a first look at GVCs from the development angle, and raises policy questions regarding the governance of GVCs.
Work in Progress
Left-Behind Children and Elderly: The Unintended Consequences of Trade Reforms.
Trade-Induced Labor Market Adjustment: China Syndrome from China's Perspective.
Supply Chain Trade and Productivity Spillovers: Evidence from Chinese Processing Firms. (with Zhiyuan Chen)
Publications
Cascading Trade Protection: Evidence from the US (with Aksel Erbahar)
Journal of International Economics, 2017, vol. 108, pp. 274-299
Media Coverage: Vox
Trade Liberalization and the Great Labor Reallocation
Latest Version (3/2017)
Awarded the RoWE Prize for young economists at the 18th European Trade Study Group (ETSG) Annual Conference.
The extent to which a country can benefit from trade openness crucially depends on its ease of reallocating resources. However, we know little about the role of domestic frictions in shaping the effects of trade policies. I address this question by analyzing the impact of tariff reductions on the spatial allocation of labor in China, and how this impact depends on migration frictions that stem from China's household registration system (hukou). I first provide reduced-form evidence that input trade liberalization has induced significant spatial labor reallocation in China, with a stronger effect in regions with less hukou frictions. Then, I construct and estimate a quantitative spatial model with input-output linkages and hukou frictions to examine the general equilibrium effects of tariff reductions and perform counterfactuals. The quantitative exercise shows that trade liberalization increases China's welfare by 0.63%. Abolishing the hukou system leads to a direct welfare improvement of 1.51%. Additionally, it increases gains from tariff reductions by 2% and alleviates its negative distributional consequences. In this process, I develop a novel measure of migration frictions associated with the hukou system.
Trade Costs, Global Value Chains and Economic Development
Latest Version (5/2017)
Revise and Resubmit, Journal of Economic Geography
This paper develops a model to study the impact of trade costs on developing countries’ industrialization when sequential production is networked in global value chains (GVCs). In a two-country setting, a decrease in trade costs of intermediates is associated with South joining and moving up the value chain and both North and South experiencing welfare improvement. As trade costs further decrease, the wage gap between North and South first increases and then decreases. Extending the model to a multi-country setting, I show that reduced trade frictions lead South countries to join GVCs due to wage differentials and low trade costs. This increases the wage in North but may decrease the wages of South nations that are already part of the network. Moreover, South nations that join tend to be regionally clustered. The model provides a first look at GVCs from the development angle, and raises policy questions regarding the governance of GVCs.
Work in Progress
Left-Behind Children and Elderly: The Unintended Consequences of Trade Reforms.
Trade-Induced Labor Market Adjustment: China Syndrome from China's Perspective.
Supply Chain Trade and Productivity Spillovers: Evidence from Chinese Processing Firms. (with Zhiyuan Chen)
Publications
Cascading Trade Protection: Evidence from the US (with Aksel Erbahar)
Journal of International Economics, 2017, vol. 108, pp. 274-299
Media Coverage: Vox
