Author Archives: jdingel

Center for Firms in the Global Economy

Neat: “The Center for Firms in the Global Economy is a research center that aims at analyzing firm behavior in a globalized economy, with a special attention to companies in Europe as well as developing countries. The center primarily produces academic research papers but would take part in international business or public policy oriented projects.”

Woods vs Bhagwati: Freer vs fairer trade

Earlier this month, Oxford’s Ngaire Woods and Columbia’s Jagdish Bhagwati debated the merits of free trade versus fair trade at the Economist. Aaditya Mattoo, Simon Evenett, Kevin Watkins, and Thea Mei Lee also contributed along the way. The motion: “This house believes that making trade fairer is more important than making it freer.”

I think the debate suffered from a proliferation of competing definitions of fairness, a problem noted by Evenett that is inherent to the topic. Such online debates usually produce more questions than conclusions, which makes them useful introductions to an area of inquiry.  This debate might be a good means of motivating an undergraduate class discussion of international trade and global governance.

[Hat tip: Eagleton-Pierce.]

Mithas & Lucas “U.S. Visa Policies and Compensation of Information Technology Professionals”

Management Science, Vol. 56, No. 5, May 2010, pp. 745–765, pdf

We find that after controlling for their human capital attributes, foreign IT professionals (those without U.S. citizenship and those with H-1B or other work visas) earn a salary premium when compared with IT professionals with U.S. citizenship. The salary premiums for non-U.S. citizens and for those on work visas fluctuate in response to supply shocks created by the annual caps on new H-1B visas. Setting lower and fully utilized annual caps results in higher salary premiums for non-U.S. citizens and those with work visas…
Collectively, the presence of salary premiums for foreign professionals even when a visa cap is under-utilized and the fact that H-1B professionals’ salary premiums are more directly affected by H-1B visa restrictions than that of green card holders imply that (1) foreign IT professionals are complements of American IT professionals, and (2) H-1B professionals may be substitutes for each other because a reduction in their supply affects their wages much more than that of green card holders.

We find that after controlling for their human capital attributes, foreign IT professionals (those without U.S. citizenship and those with H-1B or other work visas) earn a salary premium when compared with IT professionals with U.S. citizenship. The salary premiums for non-U.S. citizens and for those on work visas fluctuate in response to supply shocks created by the annual caps on new H-1B visas. Setting lower and fully utilized annual caps results in higher salary premiums for non-U.S. citizens and those with work visas…

Collectively, the presence of salary premiums for foreign professionals even when a visa cap is under-utilized and the fact that H-1B professionals’ salary premiums are more directly affected by H-1B visa restrictions than that of green card holders imply that (1) foreign IT professionals are complements of American IT professionals, and (2) H-1B professionals may be substitutes for each other because a reduction in their supply affects their wages much more than that of green card holders.

Whither US trade policy?

Bernard Gordon:

From a US government perspective, the Trans Pacific Partnership is the only game in town. Three main reasons explain why: the state of the WTO’s Doha Round; China’s role in Asia; and America’s self-image of its place in the Pacific. A possible fourth reason is that Washington regards the TPP is the only doable multilateral trade initiative…

For a United States that almost singlehandedly launched both the global GATT and then the WTO, a ‘Trans-Pacific Partnership’ is quite a comedown. All the more so when, if the WTO’s Doha Round were completed, its ‘most favoured nation’ clause would render moot most of the preferential trade agreements now cluttering world trade, and simultaneously kick-start global trade growth. And yet only the unlikely goal of a TPP, so 20th century, will be pressed by the US because that’s all the President is prepared to undertake at this point.

Read the whole thing. (HT: Larry.)

Schumer attacks international phone calls

Would a 25-cent specific tariff on importing customer service phone calls violate US WTO obligations?

Reuters: In a bid to reduce outsourcing of U.S. jobs, a Democratic senator said on Sunday he will push legislation to make companies inform customers when their calls were being transferred outside the United States and charge companies for those transferred calls…

Schumer’s bill would also impose a $0.25 excise tax on any customer service call placed inside the United States which is transferred to an agent in a foreign location. The fee would be assessed on the company that transferred the call.

Why might you want oligopolistic models of trade?

Why might you want oligopolstic models of trade?
“In 2004 Nokia’s share of Finnish GDP was 3.5 per cent and in 2003 it accounted for almost a quarter of Finland’s exports” (Neary, 2010).

“In 2004 Nokia’s share of Finnish GDP was 3.5 per cent and in 2003 it accounted for almost a quarter of Finland’s exports” (Neary, 2010).

Who receives US farm subsidies?

The US Department of Agriculture is no longer centralizing data that made it easier to pinpoint individuals who receive farm payments, which total about $15 billion annually. The Environmental Working Group has long been publicizing the individuals who receive subsidy payments, such as members of Congress, Scottie Pippen, and Ted Turner. Now EWG’s job is more difficult due to less transparent government.

Via Wilkinson.