Essays in International Trade

Author:

Kanasheuski, Yauhen

Graduate Program:

Economics

Degree:

Doctor of Philosophy

Document Type:

Dissertation

Date of Defense:

March 06, 2020

Committee Members:

Jonathan Eaton, Dissertation Advisor/Co-Advisor
Jonathan Eaton, Committee Chair/Co-Chair
Stephen Ross Yeaple, Committee Member
Jingting Fan, Committee Member
Bumba Mukherjee, Outside Member
Barry William Ickes, Program Head/Chair

Keywords:

international trade
skill premium
inequality
digital economy
multinational firms

Abstract:

In Chapter 1, I examine if the sparse trade patterns between affiliates and parents of multinational firms are a puzzle for a quantitative model of global sourcing. I find that recently developed models of global sourcing broadly reproduce the the skewed distributions of trade flows between parents and affiliates within multinational firms. Distributions of affiliate-to-parent sales from a simulated global sourcing model are consistent with the patterns reported from the data on multinationals. In Chapter 2, I examine to what extent trade liberalization contributed to changes in skill premia and quantify the impact of trade liberalization against other quantitatively important channels such as technological growth and rising demand for skill intensive services. Skill premia increased in multiple countries in the world in recent decades but potentially for different reasons. This chapter is a quantitative estimation of how falling sectoral trade frictions, technological growth and reallocation of valued added to skill-intensive industries contribute to the growth of skill premia. In a baseline calibration for 29 countries over years 1995 - 2007 I find that shocks to technology account for 88% of growth in skill-premia for an average country. Among sectoral shocks to trade frictions, shocks in capital equipment sector account for 82% on average. In contrast, capital equipment sector accounts for less than a third of total effect in terms of technology shocks for most countries. Growth of relative demand for services driven by differential sectoral income elasticities in preferences exacerbates the response of skill premia to technology and trade frictions shocks by up to 20%. In Chapter 3, I study international trade of digital goods. Using product-level sales data of PC games on digital distribution platform STEAM, I estimate the effects of geographical and cultural barriers on digital international trade. I find that even in this extreme case when trade does not involve any physical delivery and information frictions are small and not related to geography, the effect of distance on trade volumes is still statistically significant yet an order of magnitude smaller than for trade in physical goods. Translating the content of a digital good into the language of the destination market increase sales by around 20%. This suggests that firms take language support into serious consideration when selling in culturally differentiated markets.