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on International Trade |
| By: | Richard Frensch (OS Regensburg, University of Regens-burg, ZU Friedrichshafen); Michael Rindler (ZU Friedrichshafen, ifo Institute München) |
| Abstract: | We present a novel two-stage gravity specification with period-varying bilateral trade cost terms. We test our specification to confirm the benchmark result on declining international distance elasticities over time, using two new data sets. Analyzing period-varying bilateral trade cost derived from our specification offers additional insights: first, globalization has erased more than a third of the effect of distance on trade cost, mostly until the mid-nineties. Second, identifying period-varying bilateral trade cost separately for domestic vs. international trade offers a natural illustration to globalization – international trade cost are less persistent than domestic trade cost. Finally, reflecting the importance of general equilibrium adjustment, total bilateral trade cost – relating partial bilateral trade cost to multilateral resistances – are more appropriate to reflect globalization than partial bilateral trade cost. |
| Keywords: | Gravity, geography, panel models |
| JEL: | C23 F15 F40 O18 |
| Date: | 2023–06 |
| URL: | https://d.repec.org/n?u=RePEc:ost:wpaper:399 |
| By: | Pierre Coster; Julian di Giovanni; Isabelle Mejean |
| Abstract: | This paper investigates how firms adapt their sourcing of clean and dirty inputs in response to changes in climate policy. We use information from the European Union’s Emissions Trading System (EU ETS) and the Carbon Border Adjustment Mechanism (CBAM) to create a new classification of clean and dirty products based on whether they are subject to a domestic or a border carbon tax. We then combine this dataset with French firms’ product-level import data over 2000–2019 and estimate that firms’ propensity to import dirty inputs from non-EU countries increased in the 2010s, reflecting carbon leakage. A heterogeneous firm model is then used to quantify the impact of changes in firms’ sourcing of clean and dirty inputs given the implementation of a carbon tax and a carbon tariff. The simulated ETS carbon tax scenario is able to match leakage observed in the data and leads to a higher price level and a modest decline in emissions. The scenario that further includes the CBAM carbon tariff reverses carbon leakage at the cost of an additional rise in prices. Overall, household welfare declines because the higher costs associated with the carbon policies outweigh the benefits of reduced emissions. |
| Keywords: | firm sourcing; supply chain adaptation; carbon tax; carbon tariffs; carbon leakage; environment |
| JEL: | F14 F18 F64 H23 Q56 |
| Date: | 2024–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednsr:99085 |
| By: | Tobias Grohmann (University of Groningen and GLO) |
| Abstract: | Theory suggests that cultural similarity of countries increases migration flows between them. This paper brings best practices from the trade gravity literature to migration and tests this prediction. In my preferred specification, I use lags of time-varying similarity variables in a panel of international and domestic migration flows (>200 countries, 1990–2019, 5-year in- tervals) and estimate a theory-consistent structural gravity model with origin-year, destination-year, and corridor fixed effects. The results do not show the hypothesized positive effect of cultural similarity on migration. Instead, religious similarity has a significant nega- tive effect on migration, while WVS-based attitudinal similarities regarding individualism, indulgence, and trust are insignificant. Additional results suggest that cultural selection and sorting can explain these findings, where migrants are attracted by destinations that are cul- turally similar to their personal cultural beliefs rather than the average cultural beliefs of their home country. Results of a two-stage fixed effects (TSFE) procedure and a gravity-specific matching estimator, which both allow the estimation of time-invariant similarity variables, confirm that the relationship between cultural similarity and migration is more nuanced than previously thought. |
| Keywords: | international migration, culture, gravity model of migration |
| JEL: | F22 O15 Z10 |
| Date: | 2023–12 |
| URL: | https://d.repec.org/n?u=RePEc:ost:wpaper:404 |
| By: | Xinming Du; Lei Li; Eric Zou |
| Abstract: | This paper shows a cascading mechanism through which international trade-induced deforestation results in a decline of health outcomes in cities distant from where trade activities occur. We examine Brazil, which has ramped up agricultural export over the last two decades to meet rising global demand. Using a shift-share research design, we first show that export shocks cause substantial local agricultural expansion and a virtual one-for-one decline in forest cover. We then construct a dynamic area-of-effect model that predicts where atmospheric changes should be felt – due to loss of forests that would otherwise serve to filter out and absorb air pollutants as they travel – downwind of the deforestation areas. Leveraging quasi-random variation in these atmospheric connections, we establish a causal link between deforestation upstream and subsequent rises in air pollution and premature deaths downstream, with the mortality effects predominantly driven by cardiovascular and respiratory causes. Our estimates reveal a large telecoupled health externality of trade deforestation: over 700, 000 premature deaths in Brazil over the past two decades. This equates to $0.18 loss in statistical life value per $1 agricultural exports over the study period. |
| JEL: | F18 O13 Q23 Q53 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33143 |
| By: | Sonja Aleksic, Nikola Škondric; Sonja Aleksic (National Bank of Serbia); Nikola Škondric (National Bank of Serbia) |
| Abstract: | The technology balance of payments represents a statistical overview of international market transactions between residents and non-residents, resulting from technology transfers realised through intangible assets (patents, licenses, knowhow, etc.) and the provision of services with a dominant technological component (research and development, technical assistance, engineering services, etc.). It is based on balance of payments and international trade in services statistics, in accordance with the international statistical standards. In this paper, the authors developed and examined the technology balance of payments of the Republic of Serbia, in order to determine the basic trends of technology trade with foreign countries and observe the analytical value of the technology balance of payments as an indicator of international technology trade. |
| Keywords: | inflation technology balance of payments, technology transfer, balance of payments, services account |
| JEL: | F14 O33 L84 L86 |
| Date: | 2023–03 |
| URL: | https://d.repec.org/n?u=RePEc:nsb:bilten:15 |
| By: | Clayton, Christopher (Yale U); Maggiori, Matteo (Stanford U); Schreger, Jesse (Columbia U) |
| Abstract: | Governments use their countries’ economic strength from existing financial and trade relationships to achieve geopolitical and economic goals. We refer to this practice as geoeconomics. We build a framework based on three core ingredients: limited contract enforceability, input-output linkages, and externalities. Geoeconomic power arises from the ability to jointly exercise threats across separate economic activities. A hegemon, like the United States, exerts its power on firms and governments in its economic network by asking these entities to take costly actions that manipulate the world equilibrium in the hegemon’s favor. We characterize the optimal actions and show that they take the form of mark-ups on goods or higher rates on lending, but also import restrictions and tariffs. Input-output amplification makes controlling some sectors more valuable for the hegemon since changes in the allocation of these strategic sectors have a larger influence on the world economy. This formalizes the idea of economic coercion as a combination of strategic pressure and costly actions. We apply the framework to two leading examples: national security externalities and the Belt and Road Initiative. |
| JEL: | F02 P45 |
| Date: | 2024–01 |
| URL: | https://d.repec.org/n?u=RePEc:ecl:stabus:4174 |
| By: | Melvin, Jennifer |
| Abstract: | The UK is a global leader in Aid for Trade (AFT). Aid for Trade discourse frames it as a solution to development challenges and key to building trade relationships. This article examines the rhetorical value of this framing in pursuit of myriad interests amidst Brexit, the Covid-19 pandemic, and changes to the UK’s aid budget and administration. It is informed by data from government documents and interviews with AFT and aid experts. This study finds that AFT discourse is used to justify the UK’s merging of diplomatic and development agendas and its new ‘Global Britain’ identity. Le Royaume-Uni est un chef de file en Aide pour le Commerce (APC). En effet, l'Aide pour le Commerce est reconnue comme un outil indispensable au développement international et comme une élement clé lors de l'établissement de relations commerciales. Cet article examine la valeur rhétorique de cette représentation dans la foulée de la présente redéfinition du rôle Britanique dans le cadre du Brexit, de la Pandémie de Covid-19 et des récents ajustements budgétaires apportés à l’aide internationale. Il s'appuie sur des données provenant tant de documents gouvernementaux, que d’entretiens avec des experts de l'APC et d’aide internationale britannique. Cette étude révèle que le discours de l'APC est utilisé pour justifier la fusion des programmes diplomatiques et d’aide internationale menant à la révision du rôle britannique mondial en sa nouvelle identité de « Grande-Bretagne mondiale ». |
| Keywords: | Aid for Trade; sociology of development; Brexit; Covid-19; aid policy |
| JEL: | L81 |
| Date: | 2024–09–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:118559 |
| By: | Anger, Silke (Institute for Employment Research (IAB), Nuremberg); Bassetto, Jacopo (University of Bologna); Sandner, Malte (Technische Hochschule Nürnberg) |
| Abstract: | While Western countries worry about labor shortages, their institutional barriers to skill transferability prevent immigrants from fully utilizing foreign qualifications. Combining administrative and survey data in a difference-in-differences design, we show that a German reform, which lifted these barriers for non-EU immigrants, led to a 15 percent increase in the share of immigrants with a recognized foreign qualification. Consequently, non-EU immigrants' employment and wages in licensed occupations (e.g., doctors) increased respectively by 18.6 and 4 percent, narrowing the gaps with EU immigrants. Despite the inflow of non-EU immigrants in these occupations, we find no evidence of crowding out or downward wage pressure for natives. |
| Keywords: | skill transferability, occupational recognition, immigrant integration |
| JEL: | J24 J31 J62 F22 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17444 |
| By: | Sophia Baum; Moritz Laber; Martin Bruckner; Liuhuaying Yang; Stefan Thurner; Peter Klimek |
| Abstract: | Global food production and trade networks are highly dynamic, especially in response to shortages when countries adjust their supply strategies. In this study, we examine adjustments across 123 agri-food products from 192 countries resulting in 23616 individual scenarios of food shortage, and calibrate a multi-layer network model to understand the propagation of the shocks. We analyze shock mitigation actions, such as increasing imports, boosting production, or substituting food items. Our findings indicate that these lead to spillover effects potentially exacerbating food inequality: an Indian rice shock resulted in a 5.8 % increase in rice losses in countries with a low Human Development Index (HDI) and a 14.2 % decrease in those with a high HDI. Considering multiple interacting shocks leads to super-additive losses of up to 12 % of the total available food volume across the global food production network. This framework allows us to identify combinations of shocks that pose substantial systemic risks and reduce the resilience of the global food supply. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2411.03502 |
| By: | Leslie Sheng Shen; Hillary Stein |
| Abstract: | Global shipping costs have soared to record highs in recent years. Costs spiked during the COVID-19 pandemic, driven by supply chain disruptions, labor shortages, and port congestion. Costs had eased by mid-2023, but they began rising again later that year and into 2024 due to Houthi violence off the coast of Yemen that restricted access to the Suez Canal and a drought at the Panama Canal that limited vessel traffic and forced rerouting around the Cape of Good Hope. As global shipping costs have soared, US import prices also have increased. |
| Keywords: | shipping costs; import prices; cost-price pass-through; inflation |
| JEL: | E31 F14 |
| Date: | 2024–11–14 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedbcq:99072 |
| By: | Huikuri, Tuuli-Anna |
| Abstract: | How can dissatisfied parties adjust the terms of international cooperation in asymmetric agreements? While powerful states can often effectively demand renegotiation, others may struggle to convince their partners to redistribute the gains from cooperation. Strategic exit, whereby a dissatisfied state conducts unilateral exit from an agreement to initiate new negotiations, may become an attractive option in such situations. This paper investigates the prevalence of strategic exit in the international investment treaty regime, where backlash against investment dispute settlement has led some governments to exit from their bilateral investment treaties. I present evidence from two theory-building case studies of investment treaty terminations and renegotiations by Ecuador and Indonesia, including elite interviews with key policymakers. I show that while exit has successfully led to some new negotiations, dissatisfied governments have been unlikely to exit treaties only for the purposes of catalyzing reform. Rather, exit becomes attractive when domestic political benefits mitigate the international reputational costs of exit. The strategic benefit of terminations for catalyzing new negotiations, although not necessarily sought after by the withdrawing state, more likely emerges as a secondary benefit of exit. The theoretical insights from the investment treaty regime can also inform renegotiation dynamics in other international regimes. |
| Date: | 2024–07–09 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:ascmh |
| By: | Rashmi Ahuja; Shrimoyee Ganguly; Rajat Acharyya; Sugata Marjit |
| Abstract: | This paper highlights the critical role that demand-shock and policy-shock induced finite changes play for the unconventional employment consequences of such shocks at a general equilibrium of a multi-sector competitive economy. A labour market reform that lowers the institutional costs of hiring workers for the firms in traditional import-competing sectors, and a secular rise in world-demand for non-traditional skill-based exports that raises its world price, are the two specific and pertinent shocks that we consider. We show a small or minor labour market reform can paradoxically result in a larger unemployment of unskilled labour due to one of the import-competing sectors shutting down as it fails to cope up with the import competition. Subsequent reforms however raises aggregate employment. Thus, we may have a J-curve like employment response to gradual and sequential labour market reforms. A big-bang approach to policy reform may work better by avoiding such an initial adverse employment effect. Our findings add to the growing body of literature that challenges conventional wisdom about labour market flexibility having favourable impact on employment. These also emphasize the need for policymakers to carefully consider the broader economic context and potential sectoral shifts when designing labour market reforms. On the other hand, contrary to apprehensions, we show that global-demand-driven hike in the world price of the skill-based export goods may initially raise aggregate employment of unskilled workers due to a similar finite change. |
| Keywords: | labour market reforms, finite change, skilled-based exports, employment |
| JEL: | D50 F16 J32 J64 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11455 |
| By: | Carlo Medici |
| Abstract: | This paper shows that immigration fostered the emergence of organized labor in the United States. I digitize archival data to construct the first county-level dataset on historical U.S. union membership and use a shift-share instrument to isolate a plausibly exogenous shock to the labor supply induced by immigration, between 1900 and 1920. Counties with higher immigration experienced an increase in the probability of having labor unions, the number of union branches, the share of unionized workers, and the number of union members per branch. This increase occurred more prominently among skilled workers, particularly in counties more exposed to labor competition from immigrants, and in areas with less favorable attitudes towards immigration. Taken together, these results are consistent with existing workers forming and joining labor unions for economic as well as social motivations. The findings highlight a novel driver of unionization in the early 20th-century United States: in the absence of immigration, the average share of unionized workers during this period would have been 22% lower. The results also identify an unexplored consequence of immigration: the development of institutions aimed at protecting workers’ status in the labor market, with effects that continue into the present. |
| Keywords: | labor unions, immigration, labor market competition, discrimination |
| JEL: | J15 J50 J70 N31 N32 P10 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11437 |
| By: | Tacsir, Ezequiel; Pereira, Mariano; Favata, Federico; Leone, Julian |
| Abstract: | Using a multilevel analysis and the new Harmonized Latin American Innovation Surveys Database (or LAIS database) augmented with indicators from the U.S. Census Bureau's Survey of Business Owners (SBO) and the World Banks World Integrated Trade Solution (WITS), this paper presents estimates of the effects of import competition and distance to the technological frontier on firm innovation in Latin American countries. Although innovation is recognized as a multilevel phenomenon, with investment decisions not solely affected by the firm characteristics but also by the context in which each firm is embedded, the empirical literature adopting a multilevel design is still nascent and scarce. Using a two-level random slope model allows us to overcome some of the pitfalls of traditional regression models when dealing with the hierarchical structure of data while allowing us to capture the influence of contextual factors. The results suggest that the fostering effect of foreign competition depends on the firms distance to the technological frontier. The estimates suggest that the lower the foreign competition and the greater the productivity gap, the lower the probability of firms engaging in innovation. In contrast, when a firm operates in a sector that is relatively closer to the technological frontier, firms invest in innovative activities to remain at the top. These results offer a clear and useful guide for designing policies in Latin America regarding innovation among firms. While it is important to promote and stimulate innovation efforts by firms, these factors should not be overlooked as considerations: sectoral characteristics associated with the economies, sectoral openness to foreign competition, and firms distance to the technological frontier. |
| Keywords: | innovation;Latin America;multilevel modeling;LAIS database;Productivity;Competition |
| JEL: | O31 O32 C21 C25 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13833 |
| By: | Hersch, Joni (Vanderbilt University) |
| Abstract: | Using data from the Current Populations Survey 2015-2024 matched to skin color data in the New Immigrant Survey, this article shows that immigrants from countries with darker skin color face a substantial earnings penalty. The penalty is similar to that found using 2003 data on individual immigrants. Controls for extensive labor market characteristics and race and ethnicity does not eliminate the negative effect of darker skin tone on wages. Color discrimination lawsuits in light of the addition of a Middle Eastern and North African (MENA) reporting category for US government surveys may become more viable. |
| Keywords: | colorism, race, skin tone discrimination, immigrant, earnings, Current Population Survey, New Immigrant Survey, MENA |
| JEL: | J15 J61 J71 J78 K31 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17397 |
| By: | Paikin, Zachary; Toygür, Ilke; Quencez, Martin; Nagy, Stephen R. |
| Abstract: | For the past several years, two ‘mega-regions’ have been forming in global politics – Eurasia and the Indo-Pacific. Both have become a shorthand for shaping the future rules and norms of international order in the face of a global power shift. ‘Eurasia’ has served to illustrate Moscow’s commitment to deepening its strategic partnership with Beijing and creating a new distribution of influence in world politics – one in which the West lies at the periphery rather than the centre. Meanwhile, the term ‘Indo-Pacific’ has taken off in response to the deepening Sino-American rivalry and (disputed) assertions of a budding global contest between democracies and autocracies. This CEPS In-Depth Analysis paper offers an overview of these two mega-regions, including the key geopolitical and governance questions that have been shaping them over recent years and whether great power dynamics in these theatres have shifted since the start of the Ukraine War. It concludes with observations on how these shifts stand to structure transatlantic relations beyond the horizon of the current war. |
| Date: | 2022–12 |
| URL: | https://d.repec.org/n?u=RePEc:eps:cepswp:38936 |
| By: | Katarzyna Bilicka; Michael Devereux; İrem Güçeri; Katarzyna Anna Bilicka; Michael P. Devereux; Irem Guceri |
| Abstract: | Many multinational firms (MNEs) pay low or no corporation tax in high-tax countries because they shift taxable income to tax havens. We incorporate nonconvex costs of profit shifting and unobserved heterogeneity in profit-shifting ability in the MNEs’ value maximization problem to study responses of firms to tax policies. We estimate our model using UK corporate tax returns data and quantify: (i) the elasticities of tax base and capital stock with respect to tax rates, (ii) the fixed and variable components of profit-shifting costs for different firm types, and (iii) the government’s trade-off between raising tax revenue by reducing profit shifting and attracting investment. Accounting for extensive margin profit-reporting decisions, we reconcile most of the discrepancies between previous micro- and macro-level estimates of tax base elasticities. We test the predictions of the model using a quasi-natural experiment that restricted profit-shifting by Italian MNEs that operated in the UK and evaluate two types of tax policies that can be analyzed using our approach. |
| Keywords: | taxation, profit shifting, multinational firms, investment |
| JEL: | H25 H26 H32 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11458 |
| By: | Vladimir Kozlov (Leibniz-Institute for East and Southeast European Studies (IOS)); Ekaterina Sokolova (Eurasian Technological University Kazakhstan); Olga Veselovskaya (Eurasian Technological University Kazakhstan); Daria Saitova (Eurasian Technological University Kazakhstan.) |
| Abstract: | The paper is devoted to the fertility intentions of the migrants from Russia belonging to the recent wave of so called ‘Exodus’ caused by Russia’s invasion in Ukraine in 2022 and its social impact on Russian society. The authors use the disruption hypothesis and predict the drop in the fertility intentions of new-wave Russian migrants in comparison with the old- wave Russian migrants and stayers, matching and controlling for their socio-economic status. Although the new-wave migrants are in the active reproductive age, partnered and in many cases childless, the authors find a strong intention to the fertility postponement and even cancellation among them. The research is based on two on-line surveys organized in April – October 2023 via online social media and by the snowball method. The first survey provided authors with empirical data on old-wave and new-wave migrants, the second one – on stayers, who have close socio-economic characteristics to the migrants. As a result not only the lower birth intentions of the new-wave migrants was observed, but the positive effect on fertility intentions of the subjective income and willingness to stay in the host country. Especially it is obvious for the countries beyond the EU (mainly for post-Soviet and the Balkan ones). On the other hand for the countries of EU (welfare states) the fertility intentions are the highest |
| Keywords: | Fertility intensions, fertility among migrants, disruption, forced migration, Russian migrants |
| JEL: | D10 J13 J15 J18 |
| Date: | 2023–10 |
| URL: | https://d.repec.org/n?u=RePEc:ost:wpaper:403 |
| By: | Martin Haran; Michael McCord; Olawumi Fadeyi |
| Abstract: | The London office market is a primary destination for international real estate capital and a key global city and financial centre for international real estate investment. However, the increase in global uncertainties in recent years due to political events and economic and inflationary challenges highlights the need for more insights into the behaviour of international real estate capital flows. The purpose of this study is to evaluate the influence of the global and domestic environment on international real estate investment activities within the London office market over the period 20016–2023, concentrating on the separation of the UK from Europe due to the Brexit referendum, which seemingly have influenced investment flow patterns in and out of London. We employ an auto-regressive distributed lag approach using quarterly MSCI cross-border investment transactions within the central London office market for the period 2016-2023. We measure both long-run and short-run co-integrating effects and causality relative to Long-term interest rates, real effective exchange rates, total returns and yields from the London office market, GDP, Stock Market Capitalisation, the VIX index and Global Liquidity. |
| Keywords: | Brexit; Capital Flows into Real Estate; International Property Investment Trends; London Offices |
| JEL: | R3 |
| Date: | 2024–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:arz:wpaper:eres2024-257 |
| By: | Kleine, Mareike |
| Abstract: | Transparency lies at the heart of canonical theories of international negotiations and institutions—yet it is rarely directly measured or explained. This paper explores the potential downsides of transparency reforms in intergovernmental negotiations and institutions. We argue that as formal international meetings open up to the public, negotiators face incentives to shift deliberations to more informal and opaque venues, especially for sensitive and domestically contested issues. To test when and why this occurs, we present new data on three decades of intergovernmental negotiations in the Council of the European Union (1990-2019), and in particular the use of informal breaks where no minutes are taken. We find that recourse to such breaks—especially at lunch time—has increased substantially, and that ministers often take these opportunities to discuss controversial topics. We deploy quantitative and qualitative analyses to show that variations in informal breaks correlate both with institutional enhancements to transparency and with specific concerns over antagonistic political mobilization at home, notably in the form of Euroscepticism. These findings challenge received positive and normative theories about transparency in international institutions, and contribute to the literature on informal governance, negotiation studies, EU politics, and the transnational democratic deficit. |
| Keywords: | transparency; secrecy; informal governance; intergovernmental negotiations; international organization; domestic politics; European Union; informality |
| JEL: | F50 D70 D82 |
| Date: | 2024–11–04 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:124152 |
| By: | Agarwal, Isha (University of British Columbia); Chen, Wentong (Cornell University); Prasad, Eswar (Cornell University) |
| Abstract: | We provide the first empirical evidence on how media-driven narratives influence cross-border institutional investment flows. Applying natural language processing techniques to one-and-a-half million newspaper articles, we document substantial cross-country variation in sentiment and risk indices constructed from domestic media narratives about China in 15 countries. These narratives significantly affect portfolio flows, even after controlling for macroeconomic and financial fundamentals. This impact is smaller for investors with greater familiarity or private information about China and larger during periods of heightened uncertainty. Political and environmental narratives are as influential as economic narratives. Investors react more sharply to negative narratives than positive ones. |
| Keywords: | media narratives, cross-border flows, institutional investors, portfolio investment in China, textual analysis, natural language processing |
| JEL: | F30 G11 G15 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17442 |
| By: | Vasiliki Fouka; Theo Serlin |
| Abstract: | How does economic modernization affect group identity? Modernization theory emphasizes how labor migration led to the adoption of common identities. Yet economic development may reduce incentives to emigrate, preserving local cultures. We study England and Wales during the Second Industrial Revolution, a period characterized by the development of new industries and declines in transportation and communication costs. Using microdata on individuals’ names and migration decisions, we quantify identity change and its variation across space. We develop and estimate a quantitative spatial model in which migration and cultural identities are inter-dependent. Different components of economic modernization had different effects on identity change. Falling migration costs homogenized peripheral regions. In contrast, industrial development led to heterogeneity, increasing the overall prevalence of the culture of London, while also creating local identity holdouts by reducing out-migration from industrializing peripheries. Modernization promotes both national identities and persistent local identities in peripheral regions that industrialize. |
| Keywords: | migration, identity, industrialization |
| JEL: | J61 N33 N63 Z10 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11441 |
| By: | Costa-Font, Joan (London School of Economics); Cowell, Frank A. (London School of Economics) |
| Abstract: | This paper examines a behavioural explanation for the Brexit referendum result, the role of an individual's inequality aversion (IA). We study whether the referendum result was an "unconsidered Leave" partially driven by people's low aversion to inequality. We use a representative sample of the UK population fielded in 2017, and analyse the extent to which lottery-based individual IA estimates predict their Brexit vote. We consider alternative potential drivers of IA in both income and health domains; these include risk aversion, locus of control, alongside socio-economic and demographic characteristics. A greater aversion to income inequality predicts a lower probability of voting for Leave, even when controlling for risk aversion and other drivers of the Brexit vote. This effect is only true among men, for whom an increase in income IA by one standard deviation decreases their likelihood of voting for leaving the EU by 5% on average. Had there been a greater IA, the overall referendum result might have been different. However, the effect of health inequality aversion is not significantly different from zero. |
| Keywords: | Brexit, inequality aversion, income inequality aversion, health inequality aversion, imaginary grandchild, risk aversion, locus of control |
| JEL: | H1 I18 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17439 |