Stephan Huber

Trade Patterns and Endogenous Institutions: Global Evidence

We proposeanovel way to measure the rule of law intensity of exports at the goods level based on nearly 100 million disaggregated bilateral trade flows around the globe. We categorise goods into three groups: fragmented, primary and other. The theoretical literature on hold-up problems connected to incomplete or incompletely enforceable contracts or property rights predicts that goods resulting from fragmented production processes should be the most rule of law intensive. However, we find that the rule of law intensity of other goods is, on average, only slightly lower than that of fragmented goods. We examine how exogenous variation in countries’ trade patterns influences the quality of institutions. Our regressions show that trade flows generated by fragmented and other processes of production improve rule of law, while trade flows generated by primary production do not.

Product Sophistication and Spillovers from Foreign Direct Investment

Foreign direct investment (FDI) in developing countries is often associated with higher economic growth due to knowledge and technology spillovers to local firms. One way that FDI speeds up growth is by facilitating the manufacturing of more sophisticated products by local firms. So far, there is a lack of firm-level evidence how the presence of multinational firms affects the product sophistication of firms in a developing country. The aim of this paper is to fill this gap. We compile an extensive firm-product-level data set of Indian manufacturing firms, which we complement with information on product sophistication and spillovers from FDI. We then explore different channels through which spillovers from multinationals to local Indian firms foster the manufacturing of sophisticated products. We find evidence that spillovers through supplier linkages strongly increase the manufacturing of sophisticated products in India.

Labor Market Rigidity and the Factor Content of Disaggregated Trade Patterns

This article examines the power of labor market rigidities (LMR) to influence export flows of 113 countries from 1995 to 2013 for up to 5018 different goods. Since LMR can alter the productive use of factors in the production process, I expect that the interplay of a countrys LMR and the good-specific factor intensities determine comparative advantage. Based on a multi-sector Ricardian trade model, I estimate a gravity like equation to show that countries with a rigid labor market tend to export more of capital-intensive production and less of goods that have a high global sales volatility. The impact of LMR on natural resource-intensive and human capital-intensive goods depends on countries stage of development and the aggregation level of trade date, among others. My estimates consider a wide array of high-dimensional control variables such as exporter- and importer-good fixed effects, Heckscher-Ohlin forces, and bilateral gravity forces.

The Behavior of Teams and Individuals in Public Goods Games with Ostracism

Alliances often provide a collective good among their allies. This article offers laboratory experimental evidence that the possibility to vote for the exclusion of non-cooperating allies, i.e. ostracism, can be a powerful negative referendum to increase allies’ contributions to the collective good. However, it is found that ostracism does not necessarily increase earnings in a public goods game. In particular, it is shown that the ostracism mechanism is used differently by individuals. While ostracism increases contributions irrespective of the game is played with a alliances of individuals or teams as the decision makers, the earnings do not statistically significant increase in alliances of individuals. This result can be explained with different voting patterns. Compared to individuals, teams vote and in turn exclude significantly less in early periods but more in later periods of the game. Thus, negative earnings effects of ostracism, i.e., excluded players can neither contribute to the collective good nor receive from the collective good, are found to be less severe in alliances of teams.

simcadi: Similarity Indices for Categorical Distributions

In this article we introduce the Stata command simcadi. It helps to calculate indicators for the similarity of categorically ordered variables and distribution, respectively. In particular, it permits the calculation of the Cosine index, and indices introduced by Finger and Kreinin (1979), Bray and Curtis (1957), Dice (1945), Sorenson (1948), Jaccard (1912), Grubel and Lloyd (1971), Ruzicka (1958), and Gower (1971). Moreover, it allows us to compute the development of a distribution over time. The command offers various options for an efficient handling of datasets, because it permits the calculation of benchmarks of comparison automatically, and the incoporation of complex weighting schemes.