Marc-Andreas Muendler

The Extensive Margin of Exporting Products: A Firm-Level Analysis

We examine three-dimensional panel data for Brazilian and Chilean exporters, their products and destinations. The data show that (i) the distribution of the exporters’ number of goods (the exporter scope) is robust within destinations and approximately Pareto, (ii) exporter scope is positively associated with average sales per good within destinations but not across, and (iii) exports are concentrated in few top-selling goods by flrm. We present a heterogeneous-flrm model with product choice that implies these regularities and retains key predictions of previous trade models. At the country level, the model generates bilateral trade ∞ows consistent with gravity-equation evidence. Across flrms, the model explains regularities with convex product-entry costs that increase more than proportionally in scope on the distribution side. Within flrms, variable product-entry costs,

The Structure of Worker Compensation in Brazil, With a Comparison to France and the United States

We employ comprehensive linked employer-employee data for Brazil to analyze wage determinants and compare results to Abowd et al. (2001) for French and U.S. manufacturing. While returns to human capital in Brazilian manufacturing exceed those of the other countries, occupation and gender differentials are similar. The worker-characteristics component accounts for much of the greater wage inequality in Brazil, but the establishment-fixed component has scant explanatory power. Thus, firm- or industry-level factors offer little scope for explaining the differences in wage inequality. Brazils wage structure resembles that of France, a country with some similarity in labor market institutions.

The Effect of FDI on Job Security

Abstract Novel linked employer-employee data for multinational enterprises and their global workforces show that multinational enterprises that expand abroad retain more domestic jobs than competitors without foreign expansions. Propensity-score estimation demonstrates that the foreign expansion itself is a dominant explanatory factor for reduced worker separation rates. Bounding, concomitant variable tests, and further robustness checks show competing hypotheses to be less plausible. The finding is consistent with the hypothesis that, given global wage differences, a prevention of enterprises from outward FDI would lead to more domestic job losses. FDI raises domestic-worker retention more pronouncedly among highly educated workers.

The possibility of informationally efficient markets

Abstract A rational expectations equilibrium with positive demand for financial information does exist under fully revealing asset price—contrary to a wide-held conjecture. Whereas a continuum of investors is inconsistent with fully revealing equilibrium, finitely many investors with average portfolios demand information in equilibrium if they can adjust portfolio size in an additive signal-return model. More information diminishes the expected excess return of a risky asset so that investors who only have a choice of portfolio composition or whose asset endowments strongly differ from the average portfolio are worse off. Under fully revealing price, information market equilibria both with and without information acquisition are Pareto efficient.

Export or Merge? Proximity vs. Concentration in Product Space

This paper proposes a proximity-concentration tradeoff in product space as a determinant of horizontal foreign direct investment (FDI). Firms that enter a foreign market by exporting are able to capture consumer surplus by introducing a differentiated product with characteristics that the incumbent cannot match. In relatively globalized product space, in contrast, consumers perceive an entrant’s difference to existing products as less pronounced so a consumer’s virtual distance costs in product space are lower and a merger with an incumbent (horizontal FDI) offers pricing power that allows the entrant to extract consumer rent. Lower physical trade costs of shipping make Bertrand price competition fiercer in differentiated product space and can provide an additional incentive for a merger. A basic product space model with a linear Hotelling setup can therefore explain why FDI has become more frequent in recent periods in the presence of falling trade costs. Cross-border merger and acquisitions data support the model’s prediction that horizontal FDI grows relatively faster than exports in differentiated goods industries, compared to homogeneous goods industries.