Job Market Paper

Send Them Back? The Real Estate Consequences of Repatriations (with Gustavo Cortes)

How do extreme immigration shocks affect local economies? We examine how the United States' repatriation of Mexican immigrants from 1930 to 1936 affected housing and construction activity in US cities. In studying the economic consequences of immigration, the main empirical challenge is to separate cause and effect: whether the migration flow causes the economic conditions of a city or if the economic conditions instead push people to move. In this paper, we exploit an ethnically-motivated migration shock in US history to study the impact of mass deportations on local economic growth. Specifically, we study the United States' Mexican repatriation of the 1930s-a negative, large-scale shock to the Mexican workforce in the US-to quantify its effects on real estate outcomes of US cities. Using the full-count US Census and hand-collected building permits data, we show that repatriating Mexicans during the Great Depression significantly slowed city growth. Employing an instrumental variable approach that accounts for the endogenous business cycle effects of the Depression, we show that cities with higher Mexican outflow experienced lower growth in commercial and residential real estate activity. We uncover negative and significant effects of the Mexican repatriation on the number and value of building permits, as well as house values and rents. Our results suggest that repatriations have long-lasting impacts, that leave a footprint on local economic growth.

Presentations (*by coauthor; poster; scheduled): Economic History Society PhD Thesis Workshop 2021 | AREUEA 2021 National Meeting | AREUEA-ASSA 2021 | Canadian Economics Association 2021 Annual Meeting | AEA-ASSA 2020 | Urban Economics Association 2021 European Meeting | Urban Economics Association 2020 Annual Meeting | 2020 Young Economist Symposium | PhD-Economics Virtual Seminar | The Economics of Migration Junior Seminar | SKEMA Business School* | University of Florida* | University of South Florida* | Sao Paulo School of Economics - FGV* | University of Sao Paulo* | University of Michigan 2019 H2D2 Research Day | Midwest Economics Association 2019 Annual Meeting | AERUS 2019

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)

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.

[ Published Version ] [ Coverage: Revista Brasileira de Comércio Exterior, v. 123, June 2015 ]

Working Papers

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

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.

Presentations (*by coauthor; poster; scheduled): European Trade Study Group 2021 Conference | Midwest Economics Association 2021 Annual Meeting* | Econometric Society's Winter School 2020 at Delhi School of Economics | University of South Florida*

[ Working Paper (pdf) ]

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

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.

Presentations (*by coauthor; poster; scheduled): Midwest Economics Association 2021 Annual Meeting

[ Working Paper (pdf) ]

Selected Work in Progress

The Direct and Indirect Effects of Credit Shocks on Exporter and Importer Firms (with Gustavo Cortes and Bernardus Van Doornik)

The ability of firms to engage in international trade depends crucially on their access to credit. A growing body of research seeks to study the role of credit availability to international trade activity. However, the limited availability of firm-level data and the difficulty in separating credit supply shocks from other economic factors pose a significant challenge for these studies. Our paper contributes to this literature by using a combination of highly granular and unique Brazilian databases hosted by the Central Bank of Brazil to investigate and quantify the effects of a sudden change in credit availability on international trade activity, including potential spillovers to the rest of the domestic economy. This research contributes to understanding the implications of credit expansion policies in supporting exporters and importers during financial crises.

The Consequences of the Smoot–Hawley Tariffs on US Manufacturing (with Gustavo Cortes)

The Smoot–Hawley Tariff Act is considered one of the most comprehensive protectionist trade policies ever implemented in the United States. We study the responses of the local economy following the Smoot–Hawley tariffs. We exploit variation in the tariff increases across industries and variation in the industry mix of local employment across US regions to measure changes in local labor demand induced by the tariffs. This project contributes to a better understanding of the consequences of the Smoot–Hawley Tariffs to US manufacturing.

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.

[ Published Version (in Portuguese) ]