1,720,995 research outputs found
Labor market effects of trade induced technological change under intellectual property rights protection
No full textIn this paper I develop a theoretical model of wage inequality and unemployment of two types of workers (high and low skilled) in the context of trade induced technological change under different intellectual property rights (IPR) regimes. I argue that trade between two countries with different skill ratios (different relative supplies of high and low skilled workers) leads to an increasing wage gap independent of the IPR regime. If IPRs are not enforced, the unemployment rate of high skilled workers declines and of low skilled workers increases in the country with the higher skill ratio after trade liberalization. If IPRs are enforced, the unemployment rates for both skill groups decline. The main reason for these opposing effects is the reactions of R&D firms after trade liberalization. With full enforcement of IPR R&D firms will consider the aggregate demand of both markets (countries) for their investment, which leads to changes in the relative demand of high and low skilled complementary technology. More specifically, the demand for technology is related to the supply of high and low skilled workers, trade liberalization with IPR protection will lead to low skilled biased technological change in the country with the higher skill ratio and to high skilled biased technological change in the country with the lower skill ratio. With full IPR protection the aggregated skill ratio declines from the perspective of the high skill abundant country and increases for the low skill abundant country after trade liberalization. Nevertheless, the (positive) price effect of trade liberalization still favors high skilled workers in the high skill abundant country, which can lead to an increasing wage gap. I use CPS (current population survey) data to show that in the US low-skilled-workers in industries more exposed to trade with IPR violating countries face more negative labor market outcomes. Moreover, I calibrate the theoretical model to match the US and Chinese economies to demonstrate that under IPR protection trade liberalization leads to a higher wage gap, lower unemployment, and to higher wages for all workers. I show that due to nonlinearities in the production function the price effect dominates in the high skill abundant country and the technology effect in the low skill abundant country if IPRs are enforced. Thus, trade liberalization along with IPR enforcement can explain a significant increase of within country inequality. Moreover, due to the market size effect for technology, trade liberalization leads to faster technological progress and high and low skilled workers become simultaneously more productive, which is an additional gain from trade. In the context of a search unemployment model this implies that the unemployment rates for both skill groups declines. Hence, policy makers should favor trade liberalization under IPR protection, as it has higher gains from trade (in terms of real wages) and lower unemployment rates relative to trade liberalization without IPR protection. The results in the paper are clearly in line with the recent literature on the China shock, but suggests that a stronger emphasis on IPR protection during trade liberalization is able to mitigate some of the negative effects
Labor market effects of trade induced technological change under intellectual property rights protection
No full textIn this paper I develop a theoretical model of wage inequality and unemployment of two types of workers (high and low skilled) in the context of trade induced technological change under different intellectual property rights (IPR) regimes. I argue that trade between two countries with different skill ratios (different relative supplies of high and low skilled workers) leads to an increasing wage gap independent of the IPR regime. If IPRs are not enforced, the unemployment rate of high skilled workers declines and of low skilled workers increases in the country with the higher skill ratio after trade liberalization. If IPRs are enforced, the unemployment rates for both skill groups decline. The main reason for these opposing effects is the reactions of R&D firms after trade liberalization. With full enforcement of IPR R&D firms will consider the aggregate demand of both markets (countries) for their investment, which leads to changes in the relative demand of high and low skilled complementary technology. More specifically, the demand for technology is related to the supply of high and low skilled workers, trade liberalization with IPR protection will lead to low skilled biased technological change in the country with the higher skill ratio and to high skilled biased technological change in the country with the lower skill ratio. With full IPR protection the aggregated skill ratio declines from the perspective of the high skill abundant country and increases for the low skill abundant country after trade liberalization. Nevertheless, the (positive) price effect of trade liberalization still favors high skilled workers in the high skill abundant country, which can lead to an increasing wage gap. I use CPS (current population survey) data to show that in the US low-skilled-workers in industries more exposed to trade with IPR violating countries face more negative labor market outcomes. Moreover, I calibrate the theoretical model to match the US and Chinese economies to demonstrate that under IPR protection trade liberalization leads to a higher wage gap, lower unemployment, and to higher wages for all workers. I show that due to nonlinearities in the production function the price effect dominates in the high skill abundant country and the technology effect in the low skill abundant country if IPRs are enforced. Thus, trade liberalization along with IPR enforcement can explain a significant increase of within country inequality. Moreover, due to the market size effect for technology, trade liberalization leads to faster technological progress and high and low skilled workers become simultaneously more productive, which is an additional gain from trade. In the context of a search unemployment model this implies that the unemployment rates for both skill groups declines. Hence, policy makers should favor trade liberalization under IPR protection, as it has higher gains from trade (in terms of real wages) and lower unemployment rates relative to trade liberalization without IPR protection. The results in the paper are clearly in line with the recent literature on the China shock, but suggests that a stronger emphasis on IPR protection during trade liberalization is able to mitigate some of the negative effects
Trade and attitude towards the EU : what really matters
No full textThe main goal of this article is to identify which aspect of trade drives positive attitudes towards the trading partner country. Whereas research has shown a positive influence of trade already, it is not clear whether total trade, trade balance, exports or imports is the best variable to predict attitudes. Furthermore, we investigate whether different sorts of the traded good do impact attitudes differently. As attitudes are formed on an individual level, we estimate that goods whose origins are visible to the individual customer do have greater impact than goods with no visible origins. In our analysis we use data from the Global Attitudes Survey from the Pew Research Center to measure attitudes towards the European Union (EU) and data from UN Comtrade to measure trade with the EU. Our results show that imports from and total trade with correlate significantly with attitude towards the EU, whereas exports to the EU and the bilateral trade balance do not. Given that imports are a part of total trade, we argue that imports are the best variable to predict attitudes. Additionally, we found that it is the import of differentiated goods that impacts attitudes whereas the import of homogeneous goods does not. We argue therefore that positive attitudes towards a trading partner are driven by individual experiences of consumers with products from the respective countries
COVID-19 : guaranteed loans and zombie firms
No full textBased on the ZHAW Managers Survey (7-13 April 2020) we evaluate firm reactions towards the COVID-19 crisis. We find that the Swiss economic lockdown measures successfully froze the economy, i.e., firms show very little pro-active reactions towards the crisis, but drastically decrease their business activities. The firms in the survey report that the decline in foreign demand is the single most important reasons for their deteriorating business situation. The only significant pro-active reactions to mitigate the crisis are increased digitalization efforts. These efforts are expected to have a long-lasting impact on firms' performance due to a selection effect, i.e., firms with more positive experience of digitialization will maintain their higher levels of digitalization even after the crisis. In general we find that firms that faced a more difficult business situation before the crisis are affected more severely during the crisis. Moreover, we investigate the impact of the Swiss federal loan program (Bundeshilfe) on the business activities of Swiss firms. Specifically, we focus on the take up of firms and its interaction with the perceived business situation before and during the COVID-19 crisis. To this end, we develop a stylized theoretical model of financially constrained heterogeneous firms. We find that policy makers face a trade-off between immediate higher unemployment rates and long-term higher public spending. The former arises from a combination of a too strong economic impact of the COVID-19 lockdown and too low levels of loans provided by the government to financially distressed firms. Nevertheless, providing (too) high levels of loans to firms might create zombie firms that are going to default on their debt in the future leading to an increase in public spending
Decomposing the margins of transfer pricing
Full text linkThis paper examines the determinants and margins of profit shifting through transferpricing. We develop a theory model, where transfer pricing patterns are governed by a generalized concealment cost function (CCF). Our empirical analysis draws on micro-level data about transaction-level imports, firm-level characteristics, as well as tax differentials between regions in Switzerland and countries abroad. We find, both theoretically and empirically, that more productive multinational firms deviate less from the arms’ length price and trade lower quantities, compared to MNEs with lower productivity. Moreover, the decision of firms to engage in transfer pricing depends negatively on a fixed cost component in the CCF, as well as trade costs. The model allows us to estimate a theory-consistent concealment cost function, which can be used for counterfactual analysis
COVID-19 : guaranteed loans and zombie firms
Full text linkBased on the ZHAW Managers Survey (7-13 April 2020) we evaluate firm reactions towards the COVID-19 crisis. We find that the Swiss economic lockdown measures successfully froze the economy, i.e., firms show very little pro-active reactions towards the crisis, but drastically decrease their business activities. The firms in the survey report that the decline in foreign demand is the single most important reasons for their deteriorating business situation. The only significant pro-active reactions to mitigate the crisis are increased digitalization efforts. These efforts are expected to have a long-lasting impact on firms' performance due to a selection effect, i.e., firms with more positive experience of digitialization will maintain their higher levels of digitalization even after the crisis. In general we find that firms that faced a more difficult business situation before the crisis are affected more severely during the crisis. Moreover, we investigate the impact of the Swiss federal loan program (Bundeshilfe) on the business activities of Swiss firms. Specifically, we focus on the take up of firms and its interaction with the perceived business situation before and during the COVID-19 crisis. To this end, we develop a stylized theoretical model of financially constrained heterogeneous firms. We find that policy makers face a trade-off between immediate higher unemployment rates and long-term higher public spending. The former arises from a combination of a too strong economic impact of the COVID-19 lockdown and too low levels of loans provided by the government to financially distressed firms. Nevertheless, providing (too) high levels of loans to firms might create zombie firms that are going to default on their debt in the future leading to an increase in public spending
Der US-Chinesische Handelskonflikt : wer trägt die Kosten?
No full textIn der Debatte um die unter Trump eingeführten Importzölle auf chinesische Produkte wird oft vernachlässigt, dass eine optimale Zollstrategie für das importierende Land sehr wohl vorteilhafte Auswirkungen haben kann. Diese können dazu führen, dass in den USA sowohl die Zolleinnahmen ansteigen, als auch Wohlfahrtsgewinne erzeugt werden – finanziert von chinesischen Exporteuren. Seit dem 24. September 2018 erheben die USA Zölle auf chinesische Produkte mit einem Importvolumen von ungefähr 250 Mrd. US-Dollar; das sind 50% der Importe aus China. In der Debatte wird oft davon ausgegangen, dass diese Zölle der amerikanischen Volkswirtschaft direkt schaden. Dabei wird aber nicht berücksichtigt, dass die US Regierung Zölle strategisch setzen kann und damit eine optimale Zollstrategie verfolgt, siehe Irwin (1996) für einen ausführlichen Überblick. Dies kann dazu führen, dass in den USA sowohl die Zolleinnahmen ansteigen, als auch Wohlfahrtsgewinne erzeugt werden – die von chinesischen Exporteuren finanziert werden. Zwar gefährden chinesische Gegenmaßnahmen diese Wohlfahrtsvorteile, die amerikanischen Importe aus den USA übersteigen die chinesischen Importe aus den USA jedoch um mehr als das Vierfache, so dass dieser Befund relativ robust sein dürfte. Dies gilt jedenfalls solange China nicht auf sogenannte asymmetrische Vergeltungsmaßnahmen – beispielsweise durch Währungspolitik, Diskriminierung amerikanischer Unternehmen in China usw. – übergeht
Trade and attitude towards the EU : what really matters
No full textThe main goal of this article is to identify which aspect of trade drives positive attitudes towards the trading partner country. Whereas research has shown a positive influence of trade already, it is not clear whether total trade, trade balance, exports or imports is the best variable to predict attitudes. Furthermore, we investigate whether different sorts of the traded good do impact attitudes differently. As attitudes are formed on an individual level, we estimate that goods whose origins are visible to the individual customer do have greater impact than goods with no visible origins. In our analysis we use data from the Global Attitudes Survey from the Pew Research Center to measure attitudes towards the European Union (EU) and data from UN Comtrade to measure trade with the EU. Our results show that imports from and total trade with correlate significantly with attitude towards the EU, whereas exports to the EU and the bilateral trade balance do not. Given that imports are a part of total trade, we argue that imports are the best variable to predict attitudes. Additionally, we found that it is the import of differentiated goods that impacts attitudes whereas the import of homogeneous goods does not. We argue therefore that positive attitudes towards a trading partner are driven by individual experiences of consumers with products from the respective countries
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