Working Papers
"Globalization and Structural Transformation: The Role of Tradable Services" [Draft], Revise and Resubmit, Journal of International Economics
Abstract: This paper studies how globalization impacts structural transformation from goods to services. I construct a multi-country, multi-sector model in which globalization affects the transformation by changing income, prices, or comparative advantage. I parameterize it with data from 1995 to 2018 for 66 countries across low-, middle-, and high-income economies, capturing diverse stages of structural transformation. Counterfactual exercises reveal globalization’s heterogeneous impact on countries’ structural transformation. I characterize the underlying factor behind this result. Globalization affected countries’ structural transformation to the extent that it altered their comparative advantage. In countries with sector-neutral globalization—where export trade costs relative to import trade costs changed at similar rates for goods and services—comparative advantage and structural transformation were minimally impacted. In countries with sector-biased globalization, structural transformation accelerated when globalization shifted their comparative advantage toward services but decelerated when it moved their comparative advantage toward goods.
"Higher Education Policies and Spatial Inequality Across US States" with Bipul Verma [Draft]
Abstract: To what extent have the federal and state higher education policies—which have affected the supply and demand of college education—contributed to the growing cross-state wage inequality since 1980? To address this question, we develop and estimate a quantitative spatial model with endogenous college education and migration. The model features skill-biased technical changes and agglomeration effects, which means that a state’s average wage rises as more residents attain college degrees or as college-educated workers migrate into the state. Counterfactual analyses reveal that tuition discounts and public appropriations by the federal and state governments have become more progressive. In the baseline, the standard deviation of log mean wages across states increased from 0.087 in 1980 to 0.117 in 2019. In contrast, had the higher education policies remained at their 1980 levels, the standard deviation would have risen by 73% more to 0.139 by 2019. Agglomeration effects played a significant role in this result: if they had been half as strong as estimated, the standard deviation would have increased by 17% more (instead of 73%) in the counterfactual than in the baseline.
“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
"Supply Chain Diversification and Trade Policy Shocks" with Maria-Jose Carreras-Valle