Working Papers
“The China Shock and Internal Migration: Evidence from Bilateral Migration Flows”
(with Hyoungchul Kim and Seung Hoon Lee)
(with Hyoungchul Kim and Seung Hoon Lee)
“ESG and Matching in Global Supply Chains”
(with Omrane Guedhami, Jay Hyun, and Jong-Min Oh)
(with Omrane Guedhami, Jay Hyun, and Jong-Min Oh)
“The China Shock and Supply Chains: When Rising Imports Raise Exports”
(with Masahiro Endoh and Akira Sasahara)
(with Masahiro Endoh and Akira Sasahara)
“Panel Instrumental Variable Regression Models with Varying-intensity Repeated Treatments: Theory and the China Syndrome Application”
(with Dakyung Seong and Shu Shen)
(with Dakyung Seong and Shu Shen)
“The Cleanup of US Manufacturing through Pollution Offshoring”
(with Jay Hyun, Gueyon Kim, and Ziho Park)
- NBER conference on "Environment and Energy Economics Program Meeting"
- IZA Discussion Paper No. 15919
Abstract: We study the role of offshoring in understanding long-run environmental impacts of trade liberalization and the cleanup of US manufacturing. Leveraging detailed establishment-level data and a change in US trade policy toward China in the early 2000s, we show that US establishments decrease toxic emissions in response to a reduction in trade policy uncertainty. Emission abatement is more pronounced for establishments that are more likely to engage in offshoring activities. We provide comprehensive evidence that supports the pollution offshoring hypothesis: US manufacturers, especially those that emit pollutants intensely, source from abroad and establish more subsidiaries in China following the event.
(with Jay Hyun, Gueyon Kim, and Ziho Park)
- NBER conference on "Environment and Energy Economics Program Meeting"
- IZA Discussion Paper No. 15919
Abstract: We study the role of offshoring in understanding long-run environmental impacts of trade liberalization and the cleanup of US manufacturing. Leveraging detailed establishment-level data and a change in US trade policy toward China in the early 2000s, we show that US establishments decrease toxic emissions in response to a reduction in trade policy uncertainty. Emission abatement is more pronounced for establishments that are more likely to engage in offshoring activities. We provide comprehensive evidence that supports the pollution offshoring hypothesis: US manufacturers, especially those that emit pollutants intensely, source from abroad and establish more subsidiaries in China following the event.
“Downward Nominal Wage Rigidity, Fixed Exchange Rates, and Unemployment: The Case of Dollarization with a Binding Minimum Wage”
(with JaeBin Ahn and Ivan Rivadeneyra)
- Revise and Resubmit, Journal of International Economics
Abstract: We evaluate the role of exchange rate regimes in external adjustment during the 2014-2016 oil price collapse accompanied by a substantial appreciation of the US dollar. Customs data reveal that Colombian exporters under a floating exchange rate regime could adjust export prices to improve international competitiveness, while Ecuadorian exporters under dollarization could not do so. Ecuadorian administrative payroll dataset provides evidence of DNWR induced by minimum wage regulations, explaining the lack of internal devaluation. We confirm that the resulting loss of international competitiveness led Ecuadorian exporters to reduce employment. The aggregate consequence was a prolonged economic recession with rising unemployment.
(with JaeBin Ahn and Ivan Rivadeneyra)
- Revise and Resubmit, Journal of International Economics
Abstract: We evaluate the role of exchange rate regimes in external adjustment during the 2014-2016 oil price collapse accompanied by a substantial appreciation of the US dollar. Customs data reveal that Colombian exporters under a floating exchange rate regime could adjust export prices to improve international competitiveness, while Ecuadorian exporters under dollarization could not do so. Ecuadorian administrative payroll dataset provides evidence of DNWR induced by minimum wage regulations, explaining the lack of internal devaluation. We confirm that the resulting loss of international competitiveness led Ecuadorian exporters to reduce employment. The aggregate consequence was a prolonged economic recession with rising unemployment.
“Bound by Ancestors: Immigration, Credit Frictions, and Global Supply Chain Formation”
(with Jay Hyun and Ziho Park)
- Revise and Resubmit, Journal of International Economics
- NBER Working Paper No. 31157
Abstract: This paper shows that the ancestry composition shaped by century-long immigration to the US can explain the current structure of global supply chain networks. Using an instrumental variable strategy, combined with a novel dataset that links firm-to-firm global supply chain information with a US establishment database and historical migration data, we find that the co-ethnic networks formed by immigration have a positive causal impact on global supply chain relationships between foreign countries and US counties. Such a positive impact not only exists in conventional supplier-customer relationships but also extends to strategic partnerships and trade in services. Examining the causal mechanisms, we find that the positive impact is stronger for counties in which more credit-constrained firms are located and that such a stronger effect becomes even more pronounced for foreign firms located in countries with weak contract enforcement. Collectively, the results suggest that co-ethnic networks serve as social collateral to overcome credit constraints and facilitate global supply chain formation.
(with Jay Hyun and Ziho Park)
- Revise and Resubmit, Journal of International Economics
- NBER Working Paper No. 31157
Abstract: This paper shows that the ancestry composition shaped by century-long immigration to the US can explain the current structure of global supply chain networks. Using an instrumental variable strategy, combined with a novel dataset that links firm-to-firm global supply chain information with a US establishment database and historical migration data, we find that the co-ethnic networks formed by immigration have a positive causal impact on global supply chain relationships between foreign countries and US counties. Such a positive impact not only exists in conventional supplier-customer relationships but also extends to strategic partnerships and trade in services. Examining the causal mechanisms, we find that the positive impact is stronger for counties in which more credit-constrained firms are located and that such a stronger effect becomes even more pronounced for foreign firms located in countries with weak contract enforcement. Collectively, the results suggest that co-ethnic networks serve as social collateral to overcome credit constraints and facilitate global supply chain formation.
“Labor Market Rigidity at Home and Multinational Corporations' Flexible Production Reallocation Abroad”
(with JaeBin Ahn and Sunghoon Chung)
- World Bank Policy Research Working Paper No. 10114
- Media Coverage: Let's Talk Development
Abstract: An unprecedented regime change following the 2017 presidential impeachment led to a dramatic shift to more rigid labor market policies in the Republic of Korea, represented by consecutive double-digit hikes in the minimum wage in the next two years. Using a firm-level data set with detailed information about foreign affiliates over the period of 2013~19, this paper assesses the employment consequences of stricter labor market regulations. The empirical evidence uncovers an underexplored mechanism through which domestic labor market rigidity can potentially reduce domestic employment as multinational firms with flexible internal networks reallocate production tasks across borders.
(with JaeBin Ahn and Sunghoon Chung)
- World Bank Policy Research Working Paper No. 10114
- Media Coverage: Let's Talk Development
Abstract: An unprecedented regime change following the 2017 presidential impeachment led to a dramatic shift to more rigid labor market policies in the Republic of Korea, represented by consecutive double-digit hikes in the minimum wage in the next two years. Using a firm-level data set with detailed information about foreign affiliates over the period of 2013~19, this paper assesses the employment consequences of stricter labor market regulations. The empirical evidence uncovers an underexplored mechanism through which domestic labor market rigidity can potentially reduce domestic employment as multinational firms with flexible internal networks reallocate production tasks across borders.
“Product Scope Adjustment to the China Shock: Competition at Home and Abroad”
(with Seongin Hong, Jung Hur, and Manho Kang)
Abstract: How does the rise of China affect the product scope of exporters that compete with Chinese firms both at home and abroad? Korean administrative plant-level data reveal that export competition in third markets, in addition to import penetration in the domestic market, contracts the product scope. Dissecting product scope adjustment further, we uncover that export competition dampens the creation of new products, whereas import penetration precipitates the destruction of existing products. Moreover, import-induced product destruction reallocates resources toward core products. We propose disproportionate importance of domestic market, a forward-looking aspect of product creation, and creative destruction as potential drivers.
(with Seongin Hong, Jung Hur, and Manho Kang)
Abstract: How does the rise of China affect the product scope of exporters that compete with Chinese firms both at home and abroad? Korean administrative plant-level data reveal that export competition in third markets, in addition to import penetration in the domestic market, contracts the product scope. Dissecting product scope adjustment further, we uncover that export competition dampens the creation of new products, whereas import penetration precipitates the destruction of existing products. Moreover, import-induced product destruction reallocates resources toward core products. We propose disproportionate importance of domestic market, a forward-looking aspect of product creation, and creative destruction as potential drivers.
“Labor Market Effects of a Minimum Wage: Evidence from Ecuadorian Monthly Administrative Data” (with Ivan Rivadeneyra and Kenia Ramirez)
- Revise and Resubmit, Southern Economic Journal
- CESifo Working Paper No. 8987
Abstract: When Ecuador raised its monthly Unified Minimum Wage from $170 to $200 in 2008, it affected 35 percent of all private sector workers. We use this unexpected minimum wage hike under former president Rafael Correa to assess the labor market impacts of the minimum wage. We use an administrative dataset that covers all formal sector workers by month. Adopting a differences-in-differences approach at the firm level, we find that the minimum wage hike led to a decrease in labor demand in affected firms by 0.5 percent after one month and by 2.5 percent after four months. We find that the decrease in labor demand resulted from both an increase in job separations and a slowdown in hiring. At the worker level, we find that the minimum wage hike led to a 2.2 percentage point decline in the probability of remaining employed after one month, and the treatment effect rose to 3.9 percentage points after four months. Last, we estimate the effects of the minimum wage hike on wage changes by wage bin throughout the monthly wage distribution. We find that, after one month, wages increased by 17 to 37 percent for workers who were being paid less than $200 and also uncover wage spillover effects up to the 77th percentile of the wage distribution.
- Revise and Resubmit, Southern Economic Journal
- CESifo Working Paper No. 8987
Abstract: When Ecuador raised its monthly Unified Minimum Wage from $170 to $200 in 2008, it affected 35 percent of all private sector workers. We use this unexpected minimum wage hike under former president Rafael Correa to assess the labor market impacts of the minimum wage. We use an administrative dataset that covers all formal sector workers by month. Adopting a differences-in-differences approach at the firm level, we find that the minimum wage hike led to a decrease in labor demand in affected firms by 0.5 percent after one month and by 2.5 percent after four months. We find that the decrease in labor demand resulted from both an increase in job separations and a slowdown in hiring. At the worker level, we find that the minimum wage hike led to a 2.2 percentage point decline in the probability of remaining employed after one month, and the treatment effect rose to 3.9 percentage points after four months. Last, we estimate the effects of the minimum wage hike on wage changes by wage bin throughout the monthly wage distribution. We find that, after one month, wages increased by 17 to 37 percent for workers who were being paid less than $200 and also uncover wage spillover effects up to the 77th percentile of the wage distribution.
“Ostrom Meets the Pandemic: Lessons from Asian Rice Farming Traditions”
(with Sunghun Lim)
Abstract: A robust public health system during a pandemic is a common good. We argue that the ongoing coronavirus pandemic is a tragedy of the commons. During the early phases of the pandemic, Asia outperformed the US and Europe in managing it. The traditions and practices of rice farming in Asian countries are key to understanding the regional differences. Farming rice, unlike wheat, requires finding cooperative solutions to common goods problems such as irrigation. The history of rice cultivation in Asia implies that those societies have long had institutions that deal well with the commons through credible commitment, mutual monitoring, and sanctions. The descendants of Asian rice farmers commit themselves to a set of rules and are vigilant in monitoring their neighbors in common goods situations because they fear social rejection if they do not. Exploiting Asian immigration history in the US and the pandemic as a natural experiment, and using a patient-level CDC dataset, we show that Asian rice farming descendants are less likely to contract and/or die from the coronavirus even in the US. Then, using a Facebook survey, Google mobility data, and the US Census household pulse survey, we find that they were better able to resolve commons problems associated with the pandemic by getting vaccinated, wearing masks, and practicing social distancing.
(with Sunghun Lim)
Abstract: A robust public health system during a pandemic is a common good. We argue that the ongoing coronavirus pandemic is a tragedy of the commons. During the early phases of the pandemic, Asia outperformed the US and Europe in managing it. The traditions and practices of rice farming in Asian countries are key to understanding the regional differences. Farming rice, unlike wheat, requires finding cooperative solutions to common goods problems such as irrigation. The history of rice cultivation in Asia implies that those societies have long had institutions that deal well with the commons through credible commitment, mutual monitoring, and sanctions. The descendants of Asian rice farmers commit themselves to a set of rules and are vigilant in monitoring their neighbors in common goods situations because they fear social rejection if they do not. Exploiting Asian immigration history in the US and the pandemic as a natural experiment, and using a patient-level CDC dataset, we show that Asian rice farming descendants are less likely to contract and/or die from the coronavirus even in the US. Then, using a Facebook survey, Google mobility data, and the US Census household pulse survey, we find that they were better able to resolve commons problems associated with the pandemic by getting vaccinated, wearing masks, and practicing social distancing.
Publications
“Tariffs, Agricultural Subsidies, and the 2020 US Presidential Election”
(with Sunghun Lim)
American Journal of Agricultural Economics, 2023, vol 105, issue 4, pp 1149-1175.
(with Sunghun Lim)
American Journal of Agricultural Economics, 2023, vol 105, issue 4, pp 1149-1175.
“Offshoring, Matching, and Income Inequality”
Journal of Mathematical Economics, 2023, vol 106, 102846.
Journal of Mathematical Economics, 2023, vol 106, 102846.
“Anxiety or Pain? The Impact of Tariffs and Uncertainty on Chinese Firms in the Trade War”
(with Felipe Benguria, Deborah Swenson, and Mingzhi Xu)
Journal of International Economics, 2022, vol 137, 103608.
(with Felipe Benguria, Deborah Swenson, and Mingzhi Xu)
Journal of International Economics, 2022, vol 137, 103608.
“Global Influences on Gender Inequality: Evidence from Female Employment in Korea”
(with Theresa Greaney)
International Economic Review, 2022, vol 63, issue 1, pp 291-328.
(with Theresa Greaney)
International Economic Review, 2022, vol 63, issue 1, pp 291-328.
“Two-Sided Heterogeneity, Endogenous Sharing, and International Matching Markets”
Economic Theory, 2021, vol 72, issue 2, pp 473-509.
Economic Theory, 2021, vol 72, issue 2, pp 473-509.
“The Labor Market Effects of the China Syndrome: Evidence from South Korean Manufacturing” (with Mingzhi Xu)
World Economy, 2020, vol 43, issue 11, pp 3039-3087.
World Economy, 2020, vol 43, issue 11, pp 3039-3087.
“The Global Value Chain under Imperfect Capital Markets”
World Economy, 2020, vol 43, issue 2, pp 484-505.
World Economy, 2020, vol 43, issue 2, pp 484-505.
“Two-sample Instrumental Variable Regressions with Potentially Weak Instruments”
(with Shu Shen)
Stata Journal, 2019, vol 19, issue 3, pp 581-597.
(with Shu Shen)
Stata Journal, 2019, vol 19, issue 3, pp 581-597.
“Offshoring and Skill Overlap: An Empirical Investigation”
Review of International Economics, 2019, vol 27, issue 4, pp 1199-1233.
Review of International Economics, 2019, vol 27, issue 4, pp 1199-1233.
“Weak-instrument Robust Inference for Two-sample Instrumental Variables Regression”
(with Jiaying Gu and Shu Shen)
Journal of Applied Econometrics, 2018, vol 33, issue 1, pp 109-125.
(with Jiaying Gu and Shu Shen)
Journal of Applied Econometrics, 2018, vol 33, issue 1, pp 109-125.