Working Papers

Send Them Back? The Real Estate Consequences of Repatriations (with Gustavo Cortes)
Working Paper SSRN CGO WP Coverage: AEA Interview

Housing is a crucial channel through which migration affects the local economy and wealth distribution. However, most of what we know about the effects of migration on housing is from studies focused on the inflows of immigrants. This paper quantifies the impact of out-migration on local housing empirically. We study one of the largest ethnically motivated migration shocks in US history, the United States' Mexican repatriation of the 1930s. Using a novel automated matching technique to link houses across the 1930 and 1940 Censuses, we show that repatriating Mexicans during the Great Depression significantly affected housing in various dimensions. Employing an instrumental variable approach, we show that Mexican-occupied houses experienced a disproportionately large devaluation of their house values and rents in cities more exposed to the repatriation. Critically, the repatriation mattered for aggregate outcomes in US cities: it decreased building permit growth, the median house value growth, and the median rent growth at the city level. Our results suggest that repatriations have a long-lasting impact, leaving a footprint on the local economy.

Determinants of Bilateral Trade in Manufacturing and Services: A Unified Approach (with Satya Das)
Working Paper SSRN

Gravity models have been extensively used as workhorse models to study the determinants of international trade. While most of the literature has focused on trade in manufacturing, a recent literature has emerged that uses gravity models to study international trade in services. Despite showing that gravity equations are well suited to studying trade in services, there is little research on the systematic differences and specificities when using gravity models for each type of trade. This paper addresses this by studying the determinants of aggregate bilateral trade in services vis-à-vis manufacturing. The main objective is to understand the systematic differences between services and manufacturing trade that are borne out empirically. In doing so, we derive a joint theory that brings out "systematic" differences in response to scale and trade cost variables between trade in manufacturing and services. We build a unified theoretical framework that incorporates a demand bias towards services and a difference in national product differentiation between the two sectors. The demand bias yields larger income elasticities for trade in services compared to trade in manufacturing, and differences in national product differentiation produce a higher elasticity of bilateral trade in manufactures for the exporting country's size than in services. We show that the model predictions find support on traditional gravity equation estimates using various specifications and estimation approaches. We also investigate the role of virtual proximity and internet infrastructure in international trade in manufactures and services. We find that virtual proximity is a strong predictor of aggregate trade in services and manufacturing.

International Trade and Wage Inequality: Evidence from Brazil (with Lucas Chagas)
Working Paper

In this paper, we study the consequences of international trade integration on wage inequality. More specifically, we examine the direct and indirect impact of the ''two-sided'' China shock on Brazilian wage inequality. Using a detailed employer-employee database, we find empirical evidence suggesting that export and import exposure creates winners and losers, both between and within sectors. To understand the mechanisms behind this result, we extend the model proposed by Helpman et al. (2017) including firm and sector heterogeneity. Our model provides a reasonable approximation of first and second-order statistics observed in the economy. We then propose two counterfactual scenarios, in which we shut down one "side" of the shock. We show that in the absence of the export shock, wage inequality would be 5 percent higher. The primary mechanism behind this result is the fall in barriers to operating in the external market. The absence of import penetration implies a lower impact on wage variance, but only through re-composition of workers towards the Low-Tech Manufacturing sector, suggesting that import competition's primary effect is to shut down less productive firms. Our findings suggest that international trade integration with China has been an essential contributor to the decrease of wage inequality in Brazil and that this seems to be stemming mainly from the export expansion.

Refereed Publications

Port Efficiency and Brazilian Exports: A Quantitative Assessment of the Impact of Turnaround Time
The World Economy, 2018, 41, 2528–2551 (with Sérgio Kannebley Júnior)
DOI RBCE Version (in Portuguese) Coverage: USP Notícias

We study the role of port efficiency on international trade, estimating the impact of vessel turnaround time on Brazilian exports. The main empirical challenge is to control for non-observed local factors that determine trade flows. This paper addresses this challenge by combining detailed data of Brazilian exports with an empirical strategy that allows us to control for various unobserved local determinants of exports. We use a unique database with vessel turnaround time at each port and city-level exports, including information on the Brazilian port used, the destination country, and products. The empirical strategy relies on a difference-gravity equation to explore the variation in port procedures turnaround. This approach controls for unobserved characteristics and determinants common to geographically close cities, exporting the same product to the same destination country. The results suggest that port delays are associated with decreased volumes of exports and decreased product variety. We find that each additional hour of port procedure delay is equivalent to a reduction in relative local exports of 2%. On average, a 10% relative reduction in vessel turnaround time increases the number of exported product categories by 1%. Our findings suggest that delays in port procedures represent costs to Brazilian exporters, affecting both the intensive and extensive margins of trade.

Invited Publications

Trade Facilitation Indexes: The case of Brazil and its Trade Partners (with Mauricio de Souza and Rosane Faria)
Revista de Economia & Relações Internacionais, v. 10, p. 124-141, January 2012.
Publication (in Portuguese)