-
Exploring the Hiring, Pay, and Trading Patterns of U.S. Firms: The Dominance of Multinationals Engaged in Related-Party Trade
December 2024
Working Paper Number:
CES-24-77
We link U.S. job records with both firm-level business register and customs records to construct a novel set of summary statistics and descriptive regressions that highlight the central role played by the small set of multinational firms (denoted RP XM firms) who engage in both importing and exporting with related parties in translating international trade shocks to shifts in labor demand. We find that RP XM firms 1) dominate trade volumes; 2) account for very disproportionate shares of national employment and payroll; 3) employ greater shares of workers in higher pay deciles; 4) disproportionately poach other firms' high paid workers; 5) offer higher raises to their existing workers. These hiring and pay patterns generally exist even among new RP XM firms, but strengthen with RP XM tenure, and continue to hold, albeit at smaller magnitudes, after conditioning on standard proxies for firm and worker productivity. Taken together, these findings reveal that RP XM status is a reliable proxy for the kind of firm that drives the initial labor market impacts of trade shocks, and that high paid workers are likely to be most directly exposed to such shocks.
View Full
Paper PDF
-
Global Sourcing and Multinational Activity: A Unified Approach
September 2022
Working Paper Number:
CES-22-36
Multinational firms (MNEs) accounted for 42 percent of US manufacturing employment, 87 percent of US imports, and 84 of US exports in 2007. Despite their disproportionate share of global trade, MNEs' input sourcing and final-good production decisions are often studied separately. Using newly merged data on firms' trade and FDI activity by country, we show that US MNEs are more likely to import not only from the countries in which they have affiliates, but also from other countries within their affiliates' region. We rationalize these patterns in a unified framework in which firms jointly determine the countries in which to produce final goods, and the countries from which to source inputs. The model generates a new source of scale economies that arises because a firm incurs a country specific fixed cost that allows all its assembly plants to source inputs from that country. This shared fixed cost across plants creates interdependencies between firms' assembly and sourcing locations, and leads to non-monotonic responses in third markets to bilateral trade cost changes.
View Full
Paper PDF
-
Two-sided Search in International Markets
January 2022
Working Paper Number:
CES-22-02
We develop a dynamic model of international business-to-business transactions in which sellers and buyers search for each other, with the probability of a match depending on both individual and aggregate search effort. Fit to customs records on U.S. apparel imports, the model captures key cross-sectional and dynamic features of international buyer-seller relationships. We use the model to make several quantitative inferences. First, we calculate the search costs borne by heterogeneous importers and exporters. Second, we provide a structural interpretation for the life cycles of importers and exporters as they endogenously acquire and lose foreign business partners. Third, we pursue counterfactuals that approximate the phaseout of the Agreement on Textiles and Clothing (the 'China shock") and the IT revolution. Lower search costs can significantly improve consumer welfare, but at the expense of importer pro ts. On the other hand, an increase in the population of foreign exporters can congest matching to the extent of dampening or even reversing the gains consumers enjoy from access to extra varieties and more retailers.
View Full
Paper PDF
-
A Search and Learning Model of Export Dynamics
August 2021
Working Paper Number:
CES-21-17
Exporting abroad is much harder than selling at home, and overcoming hurdles to exporting takes time. Our goal is to identify specific barriers to exporting and to measure their importance. We develop a model of firm-level export dynamics that features costly customer search, network effects in finding buyers, and learning about product appeal. Fitting the model to customs records of U.S. imports of manufactures from Colombia we replicate patterns of exporter maturation. A potentially valuable intangible asset of a firm is its customer base and knowledge of a market. Our model delivers some striking estimates of what such assets are worth. Averaging across active exporters, the loss from total market amnesia (losing its current U.S. customer base along with its accumulated knowledge of product appeal) is US$ 3.4 million, about 34 percent of the value of exporting overall. About half is the loss of future sales to existing customers while the rest is the cost of relearning its appeal in the market and reestablishing visibility as an exporter. Given the importance of search, learning, and visibility, the 5-year response of total export sales to an exchange rate shock exceeds the 1-year response by about 40 percent.
View Full
Paper PDF
-
Identifying U.S. Merchandise Traders: Integrating Customs Transactions with Business Administrative Data
September 2020
Working Paper Number:
CES-20-28
This paper describes the construction of the Longitudinal Firm Trade Transactions Database (LFTTD) enabling the identification of merchandise traders - exporters and importers - in the U.S. Census Bureau's Business Register (BR). The LFTTD links merchandise export and import transactions from customs declaration forms to the BR beginning in 1992 through the present. We employ a combination of deterministic and probabilistic matching algorithms to assign a unique firm identifier in the BR to a merchandise export or import transaction record. On average, we match 89 percent of export and import values to a firm identifier. In 1992, we match 79 (88) percent of export (import) value; in 2017, we match 92 (96) percent of export (import) value. Trade transactions in year t are matched to years between 1976 and t+1 of the BR. On average, 94 percent of the trade value matches to a firm in year t of the BR. The LFTTD provides the most comprehensive identification of and the foundation for the analysis of goods trading firms in the U.S. economy.
View Full
Paper PDF
-
Are Customs Records Consistent Across Countries? Evidence from the U.S. and Colombia
March 2020
Working Paper Number:
CES-20-11
In many countries, official customs records include identifying information on the exporting and importing firms involved in each shipment. This information allows researchers to study international business networks, offshoring patterns, and the micro-foundations of aggregate trade flows. It also provides the government with a basis for tariff assessments at the border. However, there are no mechanisms in place to ensure that the shipment-level information recorded by the exporting country is consistent with the shipment-level information recorded by the importing country. And to the extent that there are discrepancies, it is not clear how prevalent they are or what form they take. In this paper we explore these issues, both to enhance our understanding of the limitations of customs records, and to inform future discussions of possible revisions in the way they are collected.
Specifically, we match U.S.-bound export shipments that appear in Colombian Customs records (DIAN) with their counterparts in the US Customs records (LFTTD): U.S. import shipments from Colombia. Several patterns emerge. First, differences in the coverage of the two countries customs records lead to significant discrepancies in the official bilateral trade flow statistics of these two countries: the DIAN database records 8 percent fewer transactions than the LFTTD database over the sample period, and the average export shipment size in the DIAN is roughly 4 percent smaller than the corresponding import shipment size in the LFTTD. These discrepancies are not due to difference in minimum shipment sizes and they are not particular to a few sectors, though they are more common among small shipments and they evolve over time.
Second, if we rely exclusively on firms' names and addresses, ignoring other shipment characteristics (value, product code, etc.), we are able to match 85 percent of the value of U.S. imports from Colombia in our LFTTD sample with particular Colombian suppliers in the DIAN. Further, fully 97 percent of the value of Colombian exports to the U.S. can be mapped onto particular importers in the U.S. LFTTD.
Third, however, match rates at the shipment level within buyer-seller pairs are low. That is, while buyers and sellers can be paired up fairly accurately, only 25-30 percent of the individual transactions in the customs records of the two countries can be matched using fuzzy algorithms at reasonable tolerance levels.
Fourth, the manufacturer ID (MANUF_ID) that appears in the LFTTD implies there are roughly twice as many Colombian exporters as actually appear in the DIAN. And similar comments apply to an analogous MANUF_ID variable constructed from importer name and address information in the DIAN. Hence studies that treat each MANUF_ID value as a distinct firm are almost surely overstating the number of foreign firms that engage in trade with the U.S. by a substantial amount.
Finally, we conclude that if countries were to require that exporters report standardized shipment identifiers'either invoice numbers or bill of lading/air waybill numbers'it would be far easier to track individual transactions and to identify international discrepancies in reporting.
View Full
Paper PDF
-
Rising Import Tariffs, Falling Export Growth: When Modern Supply Chains Meet Old-Style Protectionism
January 2020
Working Paper Number:
CES-20-01
We examine the impacts of the 2018-2019 U.S. import tariff increases on U.S. export growth through the lens of supply chain linkages. Using 2016 confidential firm-trade linked data, we document the implied incidence and scope of new import tariffs. Firms that eventually faced tariff increases on their imports accounted for 84% of all exports and represented 65% of manufacturing employment. For all affected firms, the implied cost is $900 per worker in new duties. To estimate the effect on U.S. export growth, we construct product-level measures of import tariff exposure of U.S. exports from the underlying firm micro data. More exposed products experienced 2 percentage point lower growth relative to products with no exposure. The decline in exports is equivalent to an ad valorem tariff on U.S. exports of almost 2% for the typical product and almost 4% for products with higher than average exposure.
View Full
Paper PDF
-
Do Institutions Determine Economic Geography?
Evidence from the Concentration of Foreign Suppliers
February 2019
Working Paper Number:
CES-19-05
Do institutions shape the geographic concentration of industrial activity? We explore this question in an international trade setting by examining the relationship between country-level institutions and patterns of spatial concentration of global sourcing. A priori, weak institutions could be associated with either dispersed or concentrated sourcing. We exploit location and transaction data on imports by U.S. firms and adapt the Ellison and Glaeser (1997) index to construct a product-country-specific measure of supplier concentration for U.S. importers. Results show that U.S. importers source in a more spatially concentrated manner from countries with weaker contract enforcement. We find support for the idea that, where formal contract enforcement is weak, local supplier networks compensate by sharing information to facilitate matching and transactions.
View Full
Paper PDF
-
Estimating Unequal Gains across U.S. Consumers with Supplier Trade Data
January 2018
Working Paper Number:
CES-18-04
Using supplier-level trade data, we estimate the effect on consumer welfare from changes in U.S. imports both in the aggregate and for different household income groups from 1998 to 2014. To do this, we use consumer preferences which feature non-homotheticity both within sectors and across sectors. After structurally estimating the parameters of the model, using the universe of U.S. goods imports, we construct import price indexes in which a variety is defined as a foreign establishment producing an HS10 product that is exported to the United States. We find that lower income households experienced the most import price inflation, while higher income households experienced the least import price inflation during our time period. Thus, we do not find evidence that the consumption channel has mitigated the distributional effects of trade that have occurred through the nominal income channel in the United States over the past two decades.
View Full
Paper PDF
-
Accounting for the New Gains from Trade Liberalization
March 2016
Working Paper Number:
CES-16-14
We measure the "new" gains from trade reaped by Canada as a result of the Canada-US Free Trade Agreement (CUSFTA). We think of the "new" gains from trade of a country as all welfare effects pertaining to changes in the set of firms serving that country as emphasized in the so-called "new" trade literature. To this end, we first develop an exact decomposition of the gains from trade which separates "traditional" and "new" gains. We then apply this decomposition using Canadian and US micro data and find that the "new" welfare effects of CUSFTA on Canada were negative.
View Full
Paper PDF
