This paper studies how minimum wage policies affect firm employment in China using a unique county level minimum wage data set matched to disaggregated firm survey data. We investigate both the effect of imposing a minimum wage, and the effect of the policies that tightened enforcement in 2004. We find that the average effect of minimum wage changes is modest and positive, and that there is a detectable effect after enforcement reform. Firms have heterogeneous responses to minimum wage changes which can be accounted for by differences in their wage levels and profit margins: firms with high wages or large profit margin increase employment, while those with low wages or small profit margin downsize. The increase in enforcement of China’s minimum wage in 2004 has since amplified this heterogeneity, which implies that labor regulation may reduce the monopsony rent of firms. Our results provide evidence for the theoretical predictions of the positive minimum wageemployment relationship in a monopolistic labor market.
We draw on a new data set on the use of Swiss francs and other currencies by European banks to assess the patterns of foreign currency bank lending. We show that the patterns differ sharply across foreign currencies. The Swiss franc is used predominantly for lending to residents, especially households. It is sensitive to the interest rate differential, exchange rate developments, funding availability, and to some extent international trade. Domestic lending in other currencies is used, to a greater extent, in cross-border lending, and for lending to resident nonfinancial firms, and is much less sensitive to the drivers identified for Swiss franc lending. Policy measures aimed at foreign currency lending have a clear impact on lending to residents. The results underline that not all foreign currencies are alike when it comes to foreign currency bank lending and the associated financial stability risks.
Global Value Chains (GVCs) can provide new means for developing economies to industrialise. To fully seize these opportunities, it is necessary to comprehensively measure both the intensity and type of countries' GVC integration patterns to better understand the relationship between GVCs and development. In this paper, we apply the new R package decompr to recent OECD input-output data with extended country coverage to analyse the integration patterns of developing economies in a more detailed way. We provide evidence that trends in GVCs are increasingly driven by developing countries. In addition, we show that while per capita GDP does not predict the intensity of GVC integration well, it determines the type of integration. High-income countries mainly export intermediates into GVCs and serve as markets of final demand. In contrast, developing economies join GVCs mostly in the assembly stage. However, there is evidence that developing countries have begun to shift their participation from the production of final to intermediate goods, moving upstream in GVCs and out of assembly.
This paper introduces an infrastructure for the analysis of legal metadata and textual data on international investment and trade disputes. The developed database architecture consists of three main components: (1) a WebCrawler of two key web sites for international economic law dispute information; (2) a document analyzer to transform PDFs into text files, identifying structure and footnotes within document, finding references to other disputes and storing texts as XML; and (3) multiple user interfaces to allow different user types to access the data. The architecture allows users to launch metadata queries and/or to investigate textual corpora. It therefore provides a versatile new framework for international economic law research from various angles and disciplines.
Even in export-oriented industries, only a handful of firms ship their goods abroad and these firms are systematically different from their purely domestic counterparts. The current picture does not, however, encompass the many firms that export via trade intermediaries or supply exporters with intermediate inputs. This paper uses a new and unique dataset of yearly transactions between all domestic firms in Belgium to unveil the supplier network that underpins export production. We show that even though there are only seven percent of firms that sell goods on foreign markets, more than a third of all firms are within two-transactions distance from foreign demand. Furthermore, these firms perform better than the rest of the economy and there is evidence of hierarchy within the exports supply chain whereby firm performance increases with the foreign demand exposure.
Globalization's 'second unbundling' has drastically altered the nature of international trade giving rise to what might be referred to as the trade-investment-service nexus. Today's RTAs are qualitatively different than those signed two decades ago, since they cover disciplines that go beyond preferential market access. This paper investigates whether the nature of RTAs matters when it comes to promoting trade. Controlling for the 'gravitational un-constant' terms, I use an augmented specification of the gravity model with a balanced panel over the 1994-2010 period. Employing four different econometric techniques taking care of zero trade flows, I check for robustness across all four procedures. Controlling for heterogeneity and self-selection of RTAs my results show that the nature of an RTA matters in trade promotion but the magnitude and direction of that relationship is unclear.
Public procurement for green innovation refers to tailoring public procurement policies in such a way as to promote green innovation within the wider economy. This study considers the nature of these policies, their legal limits, best practices, and how they have been implemented across a sample of four different OECD countries. The study begins with a general consideration of public procurement for green innovation and its component parts (i.e. green public procurement and innovative public procurement). This includes the theory behind such measure, their limitations, and a comparison with other ways in which a government may promote green innovation. Also included in this study is an analysis of the legal framework of public procurement for green innovation, involving such agreements as the General Procurement Agreement (GPA), the Agreement on Subsidies and Countervailing Measures (SCM), the General Agreement on Trade in Services (GATS), and various regional trading agreements (RTAs). This analysis suggests that the legal questions surrounding any given policy will turn upon its unique legal framework (i.e. the agreements to which the country in question is a signatory). Where a policy falls under the GPA there is flexibility to pursue green innovation, while the SCM appears more restrictive. RTAs incorporating public procurement provisions are quite heterogeneous, depending generally on whether the parties to the RTA are also Parties to the WTO GPA. Finally, an analysis of four sample countries indicates that, at present, public procurement for green innovation is not being widely or systematically pursued. A range of unique, individual policies does exist, and demonstrates that each country has been able to tailor its approach to their perceived needs.
