Journal of Health Economics, Volume 80, December 2021, 102538
Abstract: Recent research in the U.S. links trade-induced job displacement to deaths of despair. Should we expect the same mortality response in developing countries? This paper analyzes the effect of a trade-induced negative shock to manufacturing employment on leading causes of mortality in Mexico between 1998 and 2013. I exploit cross-municipality variation in trade exposure based on differences in industry specialization before China's accession to the WTO in 2001 to identify labor-demand shocks that are concentrated in manufacturing. I find trade-induced job loss increased mortality from diabetes, raised obesity rates, reduced physical activity, and lowered access to health insurance. These deaths were offset by declines in mortality from ischemic heart disease and chronic pulmonary disease. These findings highlight that negative employment shocks have heterogeneous impacts on mortality in developing countries, where falling incomes lead to less access to health care and nutritious food, but also reduce alcohol and tobacco use.
Flexible Wages and the Costs of Job Displacement (with Ilan Tojerow)
Abstract: This paper investigates whether flexible pay increases the wage costs of job displacement. We use quasi-exogenous variation in the timing of job loss due to mass layoffs spanning over an institutional reform that restricted single-employer bargaining, the Belgian Wage Norm in 1996. We find that average earnings losses over a ten-year period after displacement are 10 percentage points larger under flexible pay. Workers displaced from jobs with higher employer-specific wage premium—service sector and white-collar—benefit the most from restricted single-employer bargaining as their earnings fully converge to non-displaced workers' earnings within three years. We show that the differences in earnings losses across wage-setting systems are not driven by fluctuations in the business cycle. Finally, the wage-setting reform had similar effects on female workers, though it did not narrow the gender gap in pre-layoff wages. Our results suggest that reduced pay flexibility may help displaced workers catch up faster to non-displaced workers' pay premium ladder conditional on re-employment.
[IZA Discussion Paper No. 14942, December 2021]
Revised and resubmitted to The World Bank Economic Review
Abstract: This paper examines the effect of trade-induced changes in Mexican labor demand on population growth and migration responses at the local level. I exploit cross-municipality variation in exposure to a change in trade policy between the U.S. and China that eliminated potential tariff increases on Chinese imports, negatively affecting Mexican manufacturing exports to the U.S.. Municipalities more exposed to the policy change, via their industry structure, experienced greater employment loss. In the five years following the change in trade policy, more exposed municipalities experience increased population growth, driven by declines in out-migration. Conversely, six to ten years after the change in trade policy, exposure to increased trade competition is associated with decreased population growth, driven by declines in in-migration and return migration rates, and increased out-migration. My results provide an insight into trade-induced population adjustments, and have important implications for the interpretation of evidence in the literature on the labor market effects of trade.
Selected Work in Progress
Exports, Quality, and Product Differentiation: Evidence from Argentine Manufacturing Firms
Abstract: This paper explores the relationship between quality adoption, product differentiation, and export performance. Through tax identification numbers, I match firm-level survey data to administrative customs records containing information about each firm’s total value of exports by product type and country of destination. I classify products into differentiated and non-differentiated, and I use ISO 9001 certification as proxy for firms' ability to produce high quality products. First, I show that firm-product-destination-year unit values are higher for high-quality firms on average. Second, using the 2002 Argentine exchange rate devaluation as a source of variation in export demand, I find that initially high-quality firms increased total export value, export value of differentiated goods to high-income destinations, and investments in R&D more than low-quality firms after the devaluation. These results imply that policies promoting quality adoption may increase firms’ exports to high-income markets and help develop a comparative advantage in differentiated products.