Now showing 1 - 10 of 11
  • Publication
    Online Interactions, Trade And The Gravity Model
    (University College Dublin. School of Economics, 2023-08) ;
    We evaluate the drivers of online interactions and the importance of these interactions for international trade patterns. To this end, we measure the volume of online interactions between countries using a unique individual level data set with over 25 million multiplayer games played between December 2019 and August 2022 in the game Age of Empires II: Definitive Edition. We first show that, in line with the gravity model, distance is a crucial factor in determining the pattern of online interactions when trade costs are low or non-existent. This suggests that the distance effect in this environment captures additional factors such as cultural proximity. Subsequently, we use this interaction data as a new measure of cultural proximity and apply it to bilateral goods trade. We find that our measure is highly significant and reduces the importance of gravity variables, particularly the distance coefficient by around 10 %. It is also more important for diversified goods than homogeneous goods.
      40
  • Publication
    Old Firms and New Products: Does Experience Increase Survival?
    (University College Dublin. School of Economics, 2018-02) ;
    We examine the relationship between exporting experience and the duration of firm export product flows. We find that more experienced firms (in years of exporting) show a higher probability of failure associated with the introduction of new products. On the other hand, firms with broader export scope are more likely to have better survival times for newly launched products. Although apparently counter-intuitive, we show that this finding is consistent with models of multi-product firms in which firms begin exporting by launching the products closest to their core competency and gradually expand their range of products by exporting those that are further away from their core, resulting in lower survival probability for later products. Validating this interpretation, we show that the distance of the new products to the core competency of the firm plays an important role in determining the survival of new products.
      179
  • Publication
    Tariff Evasion, the Trade Gap, and Structural Trade
    (University College Dublin. School of Economics, 2022-12) ;
    While it is well-recognized that there are differences in the trade values reported by exporters and importers, a literature has emerged linking this trade gap to tariff evasion. These efforts, however, lack a structural theoretic underpinning and limit their product-level investigations to a small number of countries. Our first contribution is to provide a structural model of endogenous tariff evasion, one which then highlights the importance of both tariffs and border enforcement. Our second contribution is to use a global, product-level dataset from 2002-2019, the analysis of which is consistent with our model’s predictions.
      50
  • Publication
    The Impact of Taxes on the Extensive and Intensive Margins of FDI
    (University College Dublin. School of Economics, 2016-08) ; ;
    The design of optimal tax policy, especially with respect to attracting FDI, hinges on whether taxes affect multinational firms at the extensive or the intensive margins. Nevertheless, the literature has not yet explored the simultaneous impact of taxation on FDI on these two margins. Using firm-level cross-border investments into Europe during 2004-2013, we do so with a Heckman two-step estimator, an approach which also allows us to endogenize the number of investments and include home country and parent firm characteristics. We find that taxes affect both margins, particularly for firms that invest only once, with 92 percent of tax-induced changes in aggregate inbound FDI driven by movements at the extensive margin. In addition, we find significant effects of both home country and parent firm characteristics, pointing towards the granularity of investment decisions.
      277
  • Publication
    Products or markets: What type of experience matters for export survival?
    (Springer, 2023-07-20) ;
    Previous research has generally shown that increased export experience is positively correlated with the subsequent survival of newly launched export flows by a firm. In this paper, we find that there are important differences in the relationship between firm experience and export survival depending on the source of the experience. Specifically, experience built up by a firm from previously exporting a particular product before launching it in a new market is positively associated with the survival of a new product-market flow. In contrast, experience within a market prior to adding a new product has a mainly negative correlation with the survival probability of the new product-market export flow. This shows that taking a successful product to new markets is more likely to succeed than expanding product range within a market. We further find evidence suggestive of firms bringing their most established products to a wider range of markets while launching new product lines in their more established markets.
      33
  • Publication
    Products or Markets: What Type of Experience Matters for Export Survival?
    (University College Dublin. School of Economics, 2019-10-01) ;
    Previous research has generally shown that increased export experience has a positive impact on the subsequent survival of newly launched export relationships of a firm. In this paper, we find that there are important differences in the effects of firm experience on export survival depending on the source of the experience. Specifically, experience built up by a firm from previously exporting a particular product before launching it in a new market has a strong positive impact on the survival of a new product-market relationship. In contrast, experience within a market prior to adding a new product has a mainly negative effect on the survival probability of the additional product. This shows that taking a successful product to new markets is more likely to succeed than expanding product range within a market.
      289
  • Publication
    When and Where do Minimum Wage Hikes Increase Hours? Evidence from Ireland
    (University College Dublin. School of Economics, 2023-04) ;
    Monopsonists suppress employment and wages so as to avoid matching higher wages to their existing employees. Minimum wage hikes force them to pay their existing employees more, reducing the marginal cost of hiring and increasing both wages and employment. However, once the minimum wage exceeds the marginal product of labour, employment e ects become negative. We nd that the rst two National Minimum Wage (NMW) hikes in Ireland over the course of 2016 to 2019 increased hours worked for minimum wage workers (MWWs) in concentrated local labour markets (LLMs), while the third hike had a null or negative e ect. MWWs in non-concentrated LLMs and non-MWWs were una ected. Higher-income, more productive regions drove hours increases, while other regions showed reductions in hours following NMW hikes.
      58
  • Publication
    The Heterogeneous Impact of Brexit: Early Indications from the FTSE
    (University College Dublin. School of Economics, 2017-05) ;
    The UK's decision to leave the EU is surrounded by several studies simulating its potential effects. Alternatively, we examine expectations embodied in stock returns using a two-part estimation process. While most firms' prices fell, there was considerable heterogeneity in their relative changes. We show that this heterogeneity can be explained by the firm's global value chain, with heavily European firms doing relatively worse. For firms with few imported intermediates, this was partially offset by a greater Sterling depreciation. These changes were primarily in the first two days and highly persistent. Understanding these movements gives a better understanding Brexit's potential effects.
      906
  • Publication
    Local Labour Market Concentration and Wages in Ireland
    (University College Dublin. School of Economics, 2023-03) ;
    Economic theory predicts that monopsonistic employers suppress wages below the marginal product of labour. We measure local labour market (LLM) concentration in Ireland from 2008 to 2019 using an employment share Herfindahl-Hirschmann Index (HHI), a proxy for monopsony power. LLM concentration in Ireland has followed a similar pattern to the US and UK since 2008, surging as firms closed during the financial crisis and falling throughout the recovery. There is substantial variation in HHI by region, with the Midlands having the highest average HHI in every year. As elsewhere, workers in concentrated LLMs earn less. To investigate causality we use a leave-one-out instrumental variable design that exploits national trends in firm numbers within industry to predict local HHI. Using this approach we find an elasticity of -0.27, meaning a 10% increase in the HHI reduces earnings by 2.7%.
      46
  • Publication
    Old Firms and New Export Flows: Does Experience Increase Survival?
    (University College Dublin. School of Economics, 2019-09) ;
    In this paper we present new empirical evidence on the relationship between exporting experience and the duration of export relationships at the firm-product-destination level. Our starting hypothesis that more experienced exporters would have longer lived product-market trade relationships is quite strongly rejected in baseline specifications. However,we find that when we introduce interaction effects between experience and product scope and also between experience and similarity to the firm's core export product, our results change considerably. These findings suggest that at some level of experience as an exporter there is a decline in the marginal return on the positive effects on survival of product diversification and proximity. We suggest that this is evidence that more experienced firms launch product-destination pairs further away from their core competence and/or into more risky markets which therefore increases the risk of failure of any individual product-destination pairing.
      277