Browsing by Person "Felbermayr, Gabriel"

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Can international migration ever be made a Pareto improvement?
(2009) Felbermayr, Gabriel; Kohler, Wilhelm
We argue that compensating losers is more difficult for immigration than for trade and capital movements. While a tax-cum-subsidy mechanism allows the government to turn the gains from trade into a Pareto improvement, the same is not true for the so-called immigration surplus, if the redistributive mechanism is not allowed to discriminate against migrants. We discuss policy conclusions to be drawn from this fundamental asymmetry between migration and other forms of globalization.
Endogenous skill formation and the source country effects of emigration
(2009) Felbermayr, Gabriel; Egger, Hartmut
In this paper we set up a simple theoretical framework to study the possible source country effects of skilled labor emigration. We show that for given technologies, labor market integration necessarily lowers GDP per capita in a poor source country of emigration, because it distorts the education decision of individuals. As pointed out by our analysis, a negative source country effect also materializes if all agents face identical emigration probabilities, irrespective of their education levels. This is in sharp contrast to the case of exogenous skill supply. Allowing for human capital spillovers, we further show that with social returns to schooling there may be a counteracting positive source country effect if the prospect of emigration stimulates the incentives to acquire education. Since, in general, the source country effects are not clear, we calibrate our model for four major source countries { Mexico, Turkey, Morocco, and the Philippines { and show that an increase in emigration rates beyond those observed in the year 2000 is very likely to lower GDP per capita in poor economies.
Ethnic networks, information, and international trade : revisiting the evidence
(2009) Felbermayr, Gabriel; Jung, Benjamin; Toubal, Farid
Influential empirical work by Rauch and Trindade (REStat, 2002) finds that Chinese ethnic networks of the magnitude observed in Southeast Asia increase bilateral trade by at least 60%. We argue that this estimate is upward biased due to omitted variable bias. Moreover, it is partly related to a preference effect rather than to enforcement and/or the availability of information. Applying a theory-based gravity model to ethnicity data for 1980 and 1990, and focusing on pure network effects, we find that the Chinese network leads to a more modest amount of trade creation of about 15%. Using new data on bilateral stocks of migrants from the World Bank for the year of 2000, we extend the analysis to all potential ethnic networks. We find, i.a., evidence for a Polish, a Turkish, a Mexican, or an Indian network. While confirming the existence of a Chinese network, its trade creating potential is dwarfed by other ethnic networks.
International student mobility, student exchange programs, and migration : evidence from gravity estimations
(2022) Reczkowski, Isabella; Felbermayr, Gabriel
The thesis is dedicated to the empirical investigation of international student mobility and is divided into eight chapters. The introductory chapter 1 describes the motivation for the thesis and provides a brief overview of the current literature and the gap that this dissertation fills. Chapter 2 discusses the rationales for cross-border education, describing the four approaches of the OECD (2004) for international student mobility: the mutual understanding approach, the skilled migration approach, the revenue-generating approach, and the capacity building approach. The chapter then discusses the challenges resulting from international student mobility. Besides the brain drain and brain gain phenomenon that occurs when international students decide to work abroad, international student mobility raises the question of how to provide equal access to higher education and ensure the same level of quality and accreditation across the board. Furthermore, the chapter includes a detailed discussion on the challenges that arise when higher education is mainly publicly financed in a world where students and graduates are mobile. This is mainly the case in Europe, whereas students in other countries are accustomed to paying for higher education. Chapter 3 goes on to describe the data on international student mobility used in this work. Since data for years prior to 1998 are only available from printed UNESCO Statistical Yearbooks, this dissertation has constructed a new database entering the data manually for the years 1970 to 1997 for 29 destination countries and almost all countries of origin. The chapter demonstrates that student mobility increased sharply. Starting with an average number of roughly 460 thousand students in the first period covering the years 1970 to 1974, the number grew by a factor of about 8 to roughly 3.7 million students in the last period covering the years 2010 to 2015. This number is strongly concentrated on a few destination and origin countries: while the concentration in the destination countries decreased over the decades which were analyzed, with the top five countries accounting for about 77 percent in the 1970s and 50 percent in the period 2000 to 2015, the concentration in the origin countries increased from about 23 to 33 percent. The decreasing concentration of destination countries demonstrates the strong competition among these countries trying to attract international students. In order to better understand this concentration, chapter 4 provides a descriptive analysis of destination and origin countries. Apart from the five main Anglo-Saxon destination countries–the United States, the United Kingdom, Australia, Canada, and New Zealand–the European countries France and Germany have always been among the most important destination countries since 1970. Furthermore, Russia and Japan have played an important role and some Asian, European, and Arab countries have also recently emerged as important destination countries. The countries that send the most students abroad are Asia-Pacific Rim countries followed by European countries. With this in mind, three groups of countries have had a major impact on student mobility: Europe, Asia-Pacific countries, and Anglo-Saxon countries. In contrast to the other regions, student mobility in Europe is supported by policy-makers and instruments which are supported by large investments. Therefore, this work strives to investigate the effects of the two famous European programs which were introduced to promote student mobility: the student exchange program Erasmus that was launched in 1987, and the Bologna Process that began in 1999. Chapter 5 strives to test the hypothesis of whether the student exchange program Erasmus increases student mobility between the member countries. The chapter uses data on international student mobility for the years 1999 to 2015 obtained from the electronic UNESCO database for 155 host and 187 origin countries which are merged with a dummy variable on joint membership in the Erasmus program. Using these panel data in a theory-grounded gravity model by running fixed effects methods, the chapter finds that student mobility between Erasmus member countries is, on average, about 53 percent higher. To address the causality question, the chapter follows Wooldridge (2002) and performs an F-test for strict exogeneity and finds a positive causal effect on international student mobility. This effect is more stable for the time during and after the economic crisis. Furthermore, student exchange between Erasmus countries seems to occur more in favor of cultural experience and is not based on economic factors. Chapter 6 repeats these estimates controlling additionally for joint membership in the Bologna Process and finds that student mobility between Bologna Process members is, on average, about 50 percent higher. Importantly, both European programs–Erasmus and the Bologna Process–turn out to be significant determinants separately. Estimating the effect for the time before and after the establishment of the European Higher Education Area (EHEA) shows that the impact is higher and more stable since the EHEA was established in 2010. These findings suggest that the Erasmus program and the Bologna Process have fulfilled their goals of increasing student mobility and, therefore, justify their budget. Since the skilled migration approach argues that countries attract international students hoping that they stay in the country of studies afterwards and increase the stock of highly-skilled workers, chapter 7 investigates the question: to what extent do countries that attract foreign students benefit from an increased stock of educated foreign workers? Using information from the UNESCO Statistical Yearbooks, the chapter constructs a new panel database of bilateral international student mobility for 150 origin countries, 23 host countries for the years 1970 to 2000. These data are matched with information on bilateral stocks of international migrants by educational attainment from Docquier et al. (2008), available for 1990 and 2000. Running theory-founded gravity models by conditional fixed effects Poisson Pseudo Maximum Likelihood methods, this chapter finds that, on average, an increase of students by 10 percent increases the stock of tertiary educated workers in host countries by about 0.9 percent. That average effect is, however, entirely driven by Anglo-Saxon countries. On average, the results imply a student retention rate of about 70 percent. These findings suggest that the costs of educating foreign students are at least partially offset by increased availability of foreign talent. Finally, the last chapter 8 concludes.
Kyoto and the carbon content of trade
(2010) Felbermayr, Gabriel; Aichele, Rachel
A unilateral tax on CO2 emissions may drive up indirect carbon imports from non-committed countries, leading to carbon leakage. Using a gravity model of carbon trade, we analyze the effect of the Kyoto Protocol on the carbon content of bilateral trade. We construct a novel data set of CO2 emissions embodied in bilateral trade flows. Its panel structure allows dealing with endogenous selection of countries into the Protocol. We find strong statistical evidence for Kyoto commitments to affect carbon trade. On average, the Kyoto protocol led to substantial carbon leakage but its total effect on carbon trade was only minor.
Trade and unemployment : what do the data say?
(2009) Felbermayr, Gabriel; Prat, Julien; Schmerer, Hans-Jörg
This paper documents a robust empirical regularity: in the long-run, higher trade openness is causally associated to a lower structural rate of unemployment. We establish this fact using: (i) panel data from 20 OECD countries, (ii) cross-sectional data on a larger set of countries. The time structure of the panel data allows to deal with endogeneity concerns, whereas cross-sectional data make it possible to instrument openness by its geographical component. In both setups, we carefully purge the data from business cycle effects, include a host of institutional and geographical variables, and control for within-country trade. Our main finding is robust to various definitions of unemployment rates and openness measures. The preferred specification suggests that a 10 percent increase in total trade openness reduces unemployment by about one percentage point. Moreover, we show that openness affects unemployment mainly through its effect on TFP and that labor market institutions do not appear to condition the effect of openness.
Trade intermediation and the organization of exporters
(2009) Felbermayr, Gabriel; Jung, Benjamin
The business literature shows that exporting rms typically require the help of foreign trade intermediaries or need to set up own foreign wholesale affiliates. In contrast, conventional trade theory models assume that producers can directly access foreign consumers. This paper models the endogenous emergence of intermediaries in an international trade model where producers differ with respect to productivity as well as regarding their varieties' perceived quality and tradability. We assume that trade intermediation is prone to frictions due to the absence of enorceable cross-country contracts while own wholesale subsidiaries require capital investment. We derive the sorting pattern of rms according to their degree of competitive advantage and show how the relative prevalence of intermediation depends on the degree of heterogeneity among producers, on the importance of market-specificity of goods, or on expropriation risk. We use US export data for 50 sectors and 133 destination countries to check the empirical validity of this predictions and find robust empirical support.
Unemployment in an interdependent world
(2009) Felbermayr, Gabriel; Larch, Mario; Lechthaler, Wolfgang
We introduce search and matching unemployment into a model of trade with differentiated goods and heterogeneous firms. Countries may differ with respect to size, geographical location, and labor market institutions. Contrary to the literature, our single-sector perspective pays special attention to the role of income effects and shows that bad institutions in one country worsen labor market outcomes not only in that country but also in its trading partners. This spill-over effect is conditioned by trade costs and country size: smaller and/or more centrally located nations suffer less from inefficient policies at home and are more heavily affected from spill-overs abroad than larger and/or peripheral ones. We offer empirical evidence for a panel of 20 rich OECD countries. Carefully controlling for institutional features and for business cycle comovements between countries, we confirm our qualitative theoretical predictions. However, the magnitude of spill-over effects is larger in the data than in the theoretical model. We show that introducing real wage rigidity can remedy this problem.
WTO membership and the extensive margin of world trade : new evidence
(2009) Felbermayr, Gabriel; Kohler, Wilhelm
Recent literature has argued that, contrary to the results of a seminal paper by Rose (2004), WTO membership does promote bilateral trade, at least for developed economies and if membership includes non-formal compliance. We review the literature in order to identify open issues. We then develop the simplest possible \corner-solutions" version of the gravity model which serves as a framework to readdress these issues. We focus on the extensive margin of trade that separates positive-trade from zero-trade country pairs. We argue that the model can be consistently estimated using Poisson pseudo-maximum-likelihood methods with exporter and importer fixed effects. We account for coding issues and the potential heterogeneity of the WTO membership which recent contributions have stressed. While we find that WTO membership increases the likelihood that a given country pair trades, we do not find that the extensive margin has a strong and systematic effect on the average trade-creating potential of the WTO.