“Reputation of Quality in International Trade: Evidence from Consumer Product Recalls” (New draft coming soon)
This paper quantitatively examines the impact of exporting countries’ reputations for product quality on aggregate trade flows. I introduce a novel data set in which recall incidences retrieved from the Consumer Product Safety Commission are matched to U.S. import data from 1990-2009. Using a model of learning I construct a measure for exporter reputation where consumers internalize product recalls as bad signals. Structural estimation of the model finds that reputation is important and especially impactful for products used by children. The market share elasticity of exporter’s reputation is around 1.49 across products, similar in magnitude to the average price elasticity, which is around 1.51. Improving reputation can increase export value, but reputation is sluggish: increasing reputation by 10% can take decades for most exporters. Counterfactual exercises confirm that quality inspection institutions are welfare improving, and quality inspection is especially important for consumers of toys.
“When Opportunity Knocks: China’s Open Door Policy and Declining Educational Attainment” (Updated November 2019)
At the end of 1978, China opened the door to trade with the outside world. This study investigates how the Open Door Policy affected the educational choices and wage and employment differentials of workers born 1960-1970. Using measures of local labor markets’ export exposure, we find that the mean level of export exposure caused youths born in 1966 to be 3.4 percentage points less likely to complete high school than those born in 1960. Linking this to mid-career outcomes in 2010, we show large skill premia high-export provinces, suggesting the choice to leave school early in response to export growth resulted in substantial reductions in permanent lifetime income. Our findings suggest China’s early economic growth was likely dampened and its income inequality widened during the industrialization of the 1980s and 1990s, as the Open Door Policy reduced the availability of skilled labor and increased the skill premium for young workers.