We investigate the effects of better access to foreign markets on innovation strategies of multiproduct firms in industries with different scope for product differentiation. Industry-specific demand and cost linkages induce a distinction between the returns to innovation. In differentiated industries, cannibalization is lower and firms invest more in product innovation. In homogeneous industries, firms internalize intra-firm spillovers and invest more in process innovation. Using firm-level data and large exchange rate devaluations, we show that better access to foreign markets increases the incentive to innovate. However, we exploit differential effects across industries and show that the innovation strategies depend on the scope of differentiation. (JEL D22, D25, F14, G31, L60, O14, O31)
We use the most recent wave of the German Qualifications and Career Survey to reveal a substantial wage premium in a Mincer regression for workers performing their job from home. The premium accounts for more than 10% and persists within narrowly defined jobs as well as after controlling for workplace characteristics. In a next step, we provide evidence on substantial regional variation in the share of jobs that can be done from home in Germany. Our analysis reveals a strong, positive relation between the share of jobs with working from home opportunities and the mean worker income in a district. Assuming that jobs with the opportunity of remote work are more crisis proof, our results suggest that the COVID-19 pandemic might affect poorer regions to a greater extent. Hence, examining regional disparities is central for policy-makers in choosing economic policies to mitigate the consequences of this crisis.
This paper develops a new international trade model with capital market imperfections and endogenous borrowing costs in general equilibrium. Our theoretical model is motivated by new empirical patterns from enterprise survey data of the World Bank.Observing that a substantial fraction of the variation in nancial constraints is across rms within industries, we allow for rm-speci c exposure to nancial constraints. This leads to credit rationing and divides producers into nancially constrained and unconstrained ones. We show that endogenous adjustments of capital costs represent a new channel that reduces common gains from globalization. Trade liberalization increases the demand for capital and thus the borrowing rate. This leads to a reallocation of market shares towards nancially unconstrained producers and a larger fraction of credit-rationed rms. Both e ects increase the within-industry variance of rm outcomes and reduce welfare gains as consumers dislike heterogeneity in prices.Keywords: Credit constraints, General equilibrium, Globalization, Imperfect capital markets, Welfare.
JEL Classi cation: F10, F36, F61, L11We thank Daniel Baumgarten, Carsten Eckel, Lisandra Flach, Monika Schnitzer, and Jens Wrona, as well as participants of the Munich "IO and Trade seminar" and of the 17th Workshop "Internationale Wirtschaftsbeziehungen" in Goettingen for helpful comments and suggestions. Felix Roellig provided excellent research assistance. Financial support from the Deutsche Forschungsgemeinschaft through SFB/TR15 is gratefully acknowledged.
This paper analyzes how exporters are affected by corporate tax reforms in destination markets. We introduce tax policy in a trade model of multi-product firms and show that producers face tougher competition in export markets with lower corporate tax rates. This competitive effect induces firms to reduce the number of exported products and to skew their export sales towards the better performing varieties. We estimate the effects of corporate taxes on trade dynamics by exploiting policy reforms in 45 destination countries of exports during the period 2005-2012. Our results provide strong support for competitive effects of corporate taxation.
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