Publication

Lee, Sang Min (2026): "Globalization and Structural Transformation: The Role of Tradable Services," Journal of International Economics. [Journal link] [GitHub repo]

Working Papers

"Tariff Front-Running" with Maria-Jose Carreras-Valle [Draft] [Online appendix] [SSRN]

Abstract: We study firms' anticipatory response to tariffs and its macroeconomic implications, exploiting the one-year gap between the opening of trade investigations and the implementation of the 2018–2019 U.S. tariffs. Using a novel dataset linking shipment-level bills of lading to importing firms, we show that firms begin front-running the tariff a year ahead: they raise imports, accumulate inventories, and add sourcing countries that supply tariffed products. We develop a dynamic general-equilibrium trade model in which firms hold imports as inventories and choose countries to import from. Pre-tariff, front-running expands aggregate output and lowers prices, as larger imports and additional partners reduce the cost of imported inputs. Post-tariff, accumulated inventories keep aggregate output above and prices below the high-tariff steady-state levels for a year. Therefore, anticipation mitigates the short-run impact of the tariff. Relative to an unanticipated tariff, the present-value output gain is 0.21% of the annual final-steady-state output.

"College Education and Inequality Across Space" with Bipul Verma [Draft] [SSRN]

Abstract: Wage inequality across US states has risen since 1980 alongside uneven growth in their college-educated workforces. We show that this uneven growth reflects residents' college attainment rather than migration of the high-skilled. We develop a quantitative spatial model with endogenous college attendance and migration for education and work to quantify the effects of federal and state higher education policies. Had these policies remained at their 1980 levels, the 1980-2019 rise in the standard deviation of log mean wages across states would have been 75 percent larger. Federal policies drive this inequality-reducing effect because they are financed by nationwide taxes, and enrollment in poorer states responds more strongly to tuition reductions. Separately, we evaluate state higher education spending accounting for spatial spillovers: on average, each dollar generates $2.91 in local wage gains a decade later, but net returns are negative where brain drain is severe.

“FDI and Aggregate Productivity Growth in Chinese Manufacturing Firms” [Draft available upon request]

Abstract: This paper develops a firm-dynamics model with heterogeneous productivities and foreign direct investment (FDI). In the model, a firm can improve its productivity through foreign technology adoption, innovation, and spillovers (imitation). Unlike domestic firms, FDI firms possess foreign technology adoption capabilities. Moreover, they participate in innovation at different rates from domestic firms. These features of the model generate different productivity distributions for domestic and FDI firms. The model is disciplined using the micro-evidence from Chinese firms and their patents from 1998 to 2007. By calibrating the productivity distributions to the dataset, this study shows that the annual growth rate of aggregate productivity would decrease from 8.42% to 7.50% without the presence of FDI firms. Counterfactual exercises demonstrate that the growth contribution mainly accrues through foreign technology adoption, which explains 0.72 p.p. of the total gain of 0.92 p.p.

Selected Work in Progress

"Tradability of Goods and Real Exchange Rate Fluctuations" with Caroline Betts and Timothy J. Kehoe