Essays on International Trade and Factor Flows

Abstract

This thesis consists of eight self-contained essays on international trade and factor flows. In these essays, I address three topics that center around the following questions: What determines the boundaries of the firm in the global economy? What type of migration can countries expect to receive in the future, depending on their current migration profile? Can the labor market effects of protection explain individual attitudes towards international trade? In the first part of this thesis (Chapters 2, 3, and 4), I use firm-level data from Spain in order to investigate the boundaries of the firm in the global economy. Roughly one-third of world trade is intra-firm trade. Its distribution across countries and across sectors is not random, but responds to some underlying structural features of the economy. In this thesis, I look into the distribution of intra-firm trade across firms, and I show that it is systematically related to the productivity of the firm. The Spanish data set that I use is exceptionally rich in terms of firms' sourcing activities. It records whether a firm acquires inputs within the firm or at arm's length, and it does so separately for the inputs acquired in the Spanish economy and, if applicable, for the inputs imported from a foreign economy. This allows me to provide novel insights into the behavior of firms in terms of where and how they acquire their inputs in the global economy. In the second part of this thesis (Chapters 5, 6, and 7), I use Spanish migration data to study network externalities in the international migration of people. Network externalities occur when already settled migrants provide help in the migration endeavors of those left behind. This reduces the costs of migration for those left behind, which means that a country's current endowment with migrants will have an impact on the type of migration countries can expect to receive in the future. I use publicly available administrative migration data from Spain, in order to shed light on this phenomenon in a recent migration boom to Spain. I shall inform about the extremely fascinating period from the mid-1990s up to the rise of the Global Financial Crisis in 2007/08. Within a little more than a decade, Spain received about six million new migrants, and its total population surged from less than 40 million people to more than 45 million people. In the history of humans, there are arguably not many examples of a similarly dramatic influx of people into a country over such a short period of time. In the third part of this thesis (Chapters 8 and 9), I study whether the labor market effects of protection can explain individual attitudes towards international trade and protection. Trade economists point out that liberalizing trade unlocks welfare gains (the gains from trade) through a more efficient use of resources and more products becoming available in the countries involved. However, free trade also has the potential to benefit some groups in a society at the expense of others. This might explain why some people and countries hold more sympathetic views towards free trade than others. In this thesis, I relate individual preferences towards international trade and protection to the factor price effects of protection in the neoclassical trade model. For this purpose, I draw on large-scale survey data on public opinion derived from two different sources: the 2005 wave of the International Social Survey Program (ISSP) and the 2007 wave of the Pew Global Attitudes Project (GAP).