Progress 10/01/07 to 09/30/12
Outputs
Target Audience:
Nothing Reported
Changes/Problems:
Nothing Reported
What opportunities for training and professional development has the project provided?
Nothing Reported
How have the results been disseminated to communities of interest?
Nothing Reported
What do you plan to do during the next reporting period to accomplish the goals?
Nothing Reported
Impacts
What was accomplished under these goals?
PD hasseparated fromUC Berkeley campus on 12/31/2011. We could not get hold of her to terminate this project.
Publications
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Progress 01/01/10 to 12/31/10
Outputs
OUTPUTS: I developed new datasets on the manufacturing sectors in India and China with detailed information on firm behavior and changes in trade laws. The goal was to identify how recent changes in exposure to globalization have affected workers and firms in India and China. A related goal was to test recent theories of heterogeneous firms developed by Melitz (2003) and others to see how applicable they are. I have completed a number of research papers related to the project (see list of publications below). I gave presentations at the World Bank, the International Monetary Fund, to the Mexican government, at Yale University, and elsewhere. PARTICIPANTS: Catherine Hausman, PhD student, UC Berkeley Shanthi Nataraj, Rand Corporation Leslie Martin, PhD student, UC Berkeley Luosha Du, PhD student, UC Berkeley Gary Jefferson, Brandeis University Margaret McMillan, Tufts University TARGET AUDIENCES: Universities: Yale and elsewhere Organizations: International Monetary Fund, World Bank PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
In new research on China and India, I continue to investigate how firms are responding to changes in the trade regime in both countries. My new work on China explores how tariffs on inputs and outputs affect firm performance as well as vertical linkages from foreign investment. Another new paper, co-authored with two Berkeley PhD students Leslie Martin and Shanthi Nataraj, decomposes the increases in aggregate productivity growth across Indian firms over the last twenty years into two components: market share reallocations from less to more efficient enterprises, and learning within the same enterprise. We find that while the major trade reform in 1991 was accompanied by a reallocation of market share towards more efficient firms, most of the productivity increases over the 1985-2004 period were driven by within-firm improvements in productivity. This working paper has generated significant interest, with invitations to feature the research in VOXEU, an invitation to give the paper from the head of the World Bank in India, and other activities. Following the 2008 financial crisis, global trade flows collapsed, but quickly recovered during 2009. My co-authors Mona Haddad, Catherine Hausman, and I identify a new set of stylized facts on the 2008-2009 trade collapse that we hope can be used to shed light on the importance of demand and supply-side factors in explaining the fall in trade. We build on previous work by Peter Schott and others to decompose the fall in international trade into product entry and exit, price changes, and quantity changes for imports by Brazil, the European Union, Indonesia, and the United States. We find significant heterogeneity across product groups. While both prices and quantities fell within commodities, in manufacturing quantity changes were also negative but prices moved in the opposite direction. Consequently, within manufacturing, there is some evidence consistent with the hypothesis that supply side frictions played a role. For the United States, price increases were most significant in sectors which are typically credit constrained.
Publications
- An Anatomy of the Great Trade Collapse, with Mona Haddad and Catherine Hausman, in Managing Openness, edited by Mona Haddad, forthcoming, 2011.
- Learning from Developing Country Experience: Growth and Economic Thought Before and After the 2008-2009 Crisis, with Claudia Sepulveda, forthcoming, Comparative Economic Studies, 2011.
- Trade and Inequality, with John McLaren and Margaret McMillan, forthcoming, Annual Review of Economics, 2011.
- Offshoring Jobs Multinationals and US Employment, with Margaret McMillan, forthcoming, Review of Economics and Statistics, 2011.
- Testing for Horizontal and Vertical Foreign Investment Spillovers in China, 1998-2007, with Luosha Du and Gary Jefferson, forthcoming, Journal of Asian Economics, 2011.
- From hard to soft industrial policies in developing countries, with Andres-Rodriguez-Clare, June 27, 2010, VOXEU.
- Price versus quantities in the great trade collapse, with Mona Haddad and Catherine Hausman, August 27, 2010, VOXEU.
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Progress 01/01/09 to 12/31/09
Outputs
OUTPUTS: Outputs: I have completed a number of research papers related to the project (see list of publications below). I have also put together a dataset that merges detailed information on trade and offshoring of US multinational firms with individual level data from the Current Population Surveys. Dissemination has included a number of presentations on the topic of globalization and labor market outcomes. I gave presentations at the World Bank, at Brandeis University (on offshoring, trade, and wages), and elsewhere. PARTICIPANTS: Jason Scorse, PhD student at Berkeley and now at Monterrey Institute. This collaboration gave him an opportunity for training and professional development Margaret McMillan, Tufts University Avraham Ebenstein, Hebrew University Shannon Phillips, PhD student at Boston College Andres Rodriguez-Clare, Pennsylvania State University TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
My new research on offshoring links industry-level data on offshoring activities of U.S. multinational firms, import penetration, and export shares with individual level worker data from the Current Population Surveys. I examine whether increasing globalization through offshoring or trade has led to reallocation of labor, both within and out of manufacturing, and measure its impact on the wages of domestic workers. We also control for the "routineness" of individual occupations. The results suggest that (1) offshoring to high wage countries is positively correlated with U.S. manufacturing employment (2) offshoring to low wage countries is associated with U.S. employment declines (3) wages for workers who remain in manufacturing are generally positively affected by offshoring; in particular, I find that wages are positively associated with an increase in U.S. multinational employment in high income locations (4) much of the negative effects of globalization operate through downward pressure on wages of workers who leave manufacturing to take jobs in agriculture or services and (5) the downward pressure on aggregate U.S. wages operating through import competition has been quite important for some occupations. This effect has been overlooked because it operates across, not within, industries. I prepared a non-technical version of the research on offshoring and US wages for the internet site VOXEU. More than 10,000 individuals read the work, which also provides links to other publications on the impact of globalization on labor market outcomes. New research co-authored with Jason Scorse explored the role of multinational corporations in raising wages in developing countries. The resaerch, which focues on Indonesia, showed that foreign firms pay a wage premium compared to other types of enterprises, even after controlling for worker and firm characteristics.
Publications
- Avraham Ebenstein, Ann Harrison, Margaret McMillan and Shannon Phillips, Estimating the Impact of Trade and Offshoring on American Workers Using the Current Population Surveys, NBER Working Paper 15107, 2009.
- Ann Harrison and Jason Scorse, Do Foreign-Owned Firms Pay More Evidence from the Indonesian Manufacturing Sector, in Labour Markets and Development, edited by Ravi Kanbur and Jan Svejnar, Routledge, 2009.
- Avraham Ebenstein, Ann Harrison, Margaret McMillan, and Shannon Phillips, International trade, Offshoring, and US wages, August 31, 2009, VOXEU.
- Ann Harrison and Andres Rodriguez-Clare, NBER Working Paper, Trade, Foreign Investment, and Industrial Policy for Developing Countries, 2009.
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Progress 01/01/08 to 12/31/08
Outputs
OUTPUTS: This project has five distinct parts. I discuss the outputs of each of these five parts in turn. 1. Impact of offshoring on US wages and employment 2. Comparison of offshoring effects in the US and France 3. Create a new database for public use on labor shares 4. Identify the effects of the anti-sweatshop movement. 5. Develop databases on India and China and examine how globalization has affected workers in those countries. Progress was achieved in completing papers for parts 1,4, and 5. Databases were created for parts 3 and 5. For part 5, much of the activity included cleaning and preparing datasets to do work on India and China. These projects were disseminated in the following locations: "Trade, Foreign Investment, and Industrial Policy" (parts 4 and 5) Harvard University "Multinationals and Anti-Sweatshop Activism" (part 4) Paris School of Economics University of California, San Diego UC Berkeley Labor Lunch UC Davis NCAER (India) Georgetown University INSEAD Public Policy Institute of California World Bank "Outsourcing Jobs Multinationals and US Employment" (part 1) Columbia University New School for Social Research Yale University Brandeis Business School University of Michigan Stanford University "Foreign Investment in China" (part 5) Fudan University, China PARTICIPANTS: PhD students: Clair Null (UC Berkeley) Shanthi Nataraj (UC Berkeley) Luosha Du (UC Berkeley) Former PhD students: Jason Scorse (Monterrey Institute) Other collaborators: Margaret McMillan (Tufts University) Avi Ebenstein (Hebrew University) Gary Jefferson (Brandeis University) TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
To address part 4, I explore the linkages between multinationals and wage-setting behavior in developing countries. I show that the typical wage premium of 10 to 20 percentage points paid by multinationals to their workers shrinks to 3 to 7 percent when worker characteristics are taken into account. Consequently, part of the higher wages paid by multinationals in developing countries stems from the fact that foreign firms tend to hire better educated and more skilled workers. This research shows, however,that foreign enterprises do not unfairly "exploit" workers, paying them below what their domestic counterparts would pay. My forthcoming American Economic Review article finds that foreign firms in Indonesia during the 1990s were much more likely than domestic enterprises to raise wages and adhere to minimum wages as a consequence of the anti-sweatshop campaigns there. This research suggests that anti-sweatshop activists play an important policing role in ensuring that multinational and local enterprises comply with labor legislation. Their role is particularly critical in developing countries, where few resources are available for ensuring compliance with labor standards. We also find that the employment costs of the anti-sweatshop campaigns were minimal, as garment and footwear subcontractors cut profits to pay higher wages without reducing the number of workers. In Indonesia, the anti-sweatshop movement resulted in a type of forced profit sharing, where higher wages for TFA workers were financed largely through lower returns to capital. A more accessible version of this research, with additional tables and graphs, appears in the California Management Review and is now available as a Harvard Business School case. A second broad research area (part 1 above) examines the implications of offshoring by US multinationals for labor market outcomes in the United States. This research was motivated by the fact that between 1982 and 1999, foreign employment of US multinationals rose from 26 percent to nearly 40 percent of their labor force. Two articles, including one co-authored with current PhD student Clair Null, show that the impact of expanding foreign activity by US multinationals has different effects on US manufacturing employment depending on where the foreign activities are located. When US multinationals increase employment in high income affiliate locations, we find that foreign expansion abroad is complementary with employment at home. However, expanding activities in low income countries are associated with falling labor demand in the United States. This research directly addresses both research and policy concerns about the hollowing out of the US labor force as a consequence of globalization. This new research also show that offshoring is not the primary driver of declining domestic employment of US manufacturing multinationals between 1977 and 1999. We show that declining domestic employment of US multinationals was primarily due to falling prices of investment goods (such as computers, which substitute for labor), falling prices of consumption goods, and increasing import competition.
Publications
- US Multinational Activity Abroad and US Jobs: Substitutes or Complements, with Margaret McMillan and Clair Null, Industrial Relations, Volume 46, Number 2, 2007, pages 347-365.
- Harrison, Ann E., editor, Globalization and Poverty, Chicago: University of Chicago Press, 2007.
- Harrison, Ann E., Globalization and Poverty: An Introduction, in Harrison, Ann E., editor, Globalization and Poverty, Chicago: University of Chicago Press, 2007.
- On the links between globalization and poverty, with Margaret McMillan, Journal of Economic Inequality, Volume 5, Number 1, April 2007, pages 123-134. Reprinted in Macromarketing, (eds) S. J. Shapiro, M. Tadajewski, and C.J. Shultz, Sage Publishing, July 2009.
- Multinationals and Anti-sweatshop Activism, with Jason Scorse, forthcoming, 2009, American Economic Review.
- Do Foreign-Owned Firms Pay More Evidence from the Indonesian Manufacturing Sector, with Jason Scorse, in Labour Markets and Development, edited by Ravi Kanbur and Jan Svejnar, Routledge, 2008.
- Trade, Foreign Investment, and Industrial Policy, with Andres Rodriguez-Clare, in Handbook of Development Economics, edited by Dani Rodrik and Mark Rosenzweig, North Holland, forthcoming, 2009.
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