This paper studies the e¤ect of …rm entry deregulation on the returns to skill and education. We ... more This paper studies the e¤ect of …rm entry deregulation on the returns to skill and education. We use matched employer-employee data for the universe of workers and …rms in Portugal and exploit a comprehensive episode of entry deregulation, unique in the industrialized world, as a quasi-natural experiment to investigate how increased competition a¤ects wages. We …nd that after the reform the returns to a university degree increased by around 5 percent and the returns to skills increased by around 3 percent. We include match (worker-…rm) …xed e¤ects and thus identify the e¤ect from individuals who stay in the same …rm after the reform. Results are therefore not driven by changes in employment composition, and are supportive of education and skill becoming more valuable after the reform.
Deregulating firm entry is usually good for firms. But what about their workers? This column pres... more Deregulating firm entry is usually good for firms. But what about their workers? This column presents new research on the deregulation of firm entry and how it affects different types of workers. Using a natural experiment from Portugal, the evidence suggests that deregulating firm entry appears to boost competition and employment (and possibly aggregate income) but its gains seem largely to be reaped by better-off, better-educated workers.
This Discussion Paper is issued under the auspices of the Centre's research programme in INTERNAT... more This Discussion Paper is issued under the auspices of the Centre's research programme in INTERNATIONAL TRADE AND REGIONAL ECONOMICS. Any opinions expressed here are those of the author(s) and not those of the Centre for Economic Policy Research. Research disseminated by CEPR may include views on policy, but the Centre itself takes no institutional policy positions. The Centre for Economic Policy Research was established in 1983 as an educational charity, to promote independent analysis and public discussion of open economies and the relations among them. It is pluralist and nonpartisan, bringing economic research to bear on the analysis of medium-and long-run policy questions. These Discussion Papers often represent preliminary or incomplete work, circulated to encourage discussion and comment. Citation and use of such a paper should take account of its provisional character.
When the Asia Pacific Economic Cooperation (APEC) formally adopted the principle of "open regiona... more When the Asia Pacific Economic Cooperation (APEC) formally adopted the principle of "open regionalism" (OR) in its trade liberalization in 1991, many were optimistic that this approach suggested the bloc as a stepping stone toward global free trade. This optimistic view was reinforced by the economic theorizing of Sang-Seung Yi (1996). This paper shows formally via a simple model why OR may fail. We unpick Yi (1996) systematically and explain that OR works in his model because of quasilinear preferences and Ricardian technology assumptions. Once these assumptions are replaced with constant elasticity of substitution (CES) preferences and increasing marginal costs, OR fails to ensure global free trade as an equilibrium when the world consists of a country that is sufficiently larger than the rest of the world.
New Zealand's new Recognised Seasonal Employer (RSE) program allows workers from the Pacific Isla... more New Zealand's new Recognised Seasonal Employer (RSE) program allows workers from the Pacific Islands to come to New Zealand for up to seven months to work in the horticulture and viticulture industries. One of the explicit objectives of the program is to encourage economic development in the Pacific. In this paper we report on the results of a baseline survey taken in Vanuatu, which allows us to examine who wants to participate in the program, and who is selected amongst those interested. We find the main participants are males in their late 20s to early 40s, most of whom are married and have children. Most workers are subsistence farmers in Vanuatu and have not completed more than 10 years of schooling. Such workers would be unlikely to be accepted under existing migration channels. Nevertheless, we find RSE workers from Vanuatu to come from wealthier households, and have better English literacy and health than individuals not applying for the program. Lack of knowledge about the policy and the costs of applying appear to be the main barriers preventing poorer individuals applying.
While barriers to trade in most goods and some services including capital flows have been reduced... more While barriers to trade in most goods and some services including capital flows have been reduced considerably over the past two decades, many remain. Such policies harm most the economies imposing them, but the worst of the merchandise barriers (in agriculture and textiles) are particularly harmful to the world's poorest people, as are barriers to worker migration across borders. This paper focuses on how costly those anti-poor trade policies are, and examines possible strategies to reduce remaining distortions. Two opportunities in particular are addressed: completing the Doha Development Agenda process at the World Trade Organization (WTO), and freeing up the international movement of workers. A review of the economic benefits and adjustment costs associated with these opportunities provides the foundation to undertake benefit/cost analysis required to rank this set of opportunities against those aimed at addressing the world's other key challenges as part of the Copenhagen Consensus project. The paper concludes with key caveats and suggests that taking up these opportunities could generate huge social benefit/cost ratios that are considerably higher than the direct economic ones quantified in this study, even without factoring in their contribution to alleviating several of the other challenges identified by that project, including malnutrition, disease, poor education and air pollution.
gravity model suggest that 1990s Affected Trade? the "new wave" of regionalism has not boosted Is... more gravity model suggest that 1990s Affected Trade? the "new wave" of regionalism has not boosted Isidro Soloaga intra-bloc trading significantly. America did have a positive impact on the imports of bloc members, although MERCOSUR's exports did poorly over the mid-I 990s.
This paper introduces four versions of an international bilateral migration stock database for 22... more This paper introduces four versions of an international bilateral migration stock database for 226 by 226 countries and territories. The first three versions each consist of two matrices, the first containing migrants defined by country of birth, i.e. the foreign-born population, the second, by nationality, i.e. the foreign population. Wherever possible, the information is collected from the 2000 round of censuses, though older data are included where this information was unavailable. The first version of the matrices contains as much data as could be collated at the time of writing but also contains gaps. The later versions progressively employ a variety of techniques to estimate the missing data. The final matrix, comprising only the foreign-born, attempts to reconcile all of the available information to provide the researcher with a single and complete matrix of international bilateral migrant stocks. The final section of the paper describes some of the patterns evident in the database.
There are no satisfactory ex post estimates of the effects of regional integration on excluded co... more There are no satisfactory ex post estimates of the effects of regional integration on excluded countries' welfare. Using a formal decomposition of welfare, this paper discusses the factors that might affect these countries' welfare and aspects of their measurement. It then surveys various ex ante estimates of the effects of European integration. These suggest that neighboring countries linked tightly to the European economy could lose significantly from the latter's integration, but that for other countries the losses are likely to be very small.
... 5) discuss the problem in general, and Brenton and Winters (1990) show that if we require bot... more ... 5) discuss the problem in general, and Brenton and Winters (1990) show that if we require both reasonably general substitutions at the top level of the hierarchy and the ... Hence, we define two broad groups - 'rich' and 'poor ' - and allocate suppliers according to income levels. ...
... Thanks are due to Douglas Jay, David Mayes, Ann Morgan, John Rhodes, Peter Robson andJohn Wil... more ... Thanks are due to Douglas Jay, David Mayes, Ann Morgan, John Rhodes, Peter Robson andJohn Williamson for comments on an earlier draft of this paper. Page 2. ... SHARES OF IMPORTS RATION OF IMPORI'S 'I'O GDPI' E<:(6) EFrA and REST OF IRELAND THE WORLD ...
Rich countries' agricultural trade policies are the battleground on which the future of the WTO's... more Rich countries' agricultural trade policies are the battleground on which the future of the WTO's troubled Doha Round will be determined. Subject to widespread criticism, they nonetheless appear to be almost immune to serious reform, and one of their most common defenses is that they protect poor farmers. Our findings reject this claim. The analysis conducted here uses detailed data on farm incomes to show that major commodity programs are highly regressive in the US, and that the only serious losses under trade reform are among large, wealthy, farmers in a few heavily protected subsectors. In contrast, analysis using household data from 15 developing countries indicates that reforming rich countries' agricultural trade policies would lift large numbers of developing country farm households out of poverty. In the majority of cases these gains are not outweighed by the poverty-increasing effects of higher food prices among other households. Agricultural reforms that appear feasible, even under an ambitious Doha Round, achieve only a fraction of the benefits for developing countries that full liberalization promises, but protect the wealthiest US farms from most of the rigors of adjustment. Finally, the analysis conducted here indicates that maximal trade-led poverty reductions occur when developing countries participate more fully in agricultural trade liberalization.
... effects of trade protection and its removal on the performance of firms and industries in dev... more ... effects of trade protection and its removal on the performance of firms and industries in developing ... Without such prioritization the case for increased attention being given to trade is weak. ...technologya conduit for technology transfer/diffusionand by forcing domestic firms to ...
This paper studies the effect of competition on executive compensation. We estimate the effect of... more This paper studies the effect of competition on executive compensation. We estimate the effect of increased product market competition on the performance-pay sensitivity of CEOs, and contrast it with the effect for department managers and other workers in the corporation. We use a recent reform that simplied firm entry regulation in Portugal as a quasi-natural experiment. The empirical strategy exploits the staggered implementation of the reform across municipalities. Using linked employer-employee data for the universe of workers and firms, we show that increased product market competition, following the deregulation, decreased the sensitivity of pay to performance of CEOs and other managers, with no significant effects found for other workers. These findings are consistent with existing theoretical results in a principal-agent framework that a fall in entry costs leads to weaker managerial incentives.
This paper studies the e¤ect of …rm entry deregulation on the returns to skill and education. We ... more This paper studies the e¤ect of …rm entry deregulation on the returns to skill and education. We use matched employer-employee data for the universe of workers and …rms in Portugal and exploit a comprehensive episode of entry deregulation, unique in the industrialized world, as a quasi-natural experiment to investigate how increased competition a¤ects wages. We …nd that after the reform the returns to a university degree increased by around 5 percent and the returns to skills increased by around 3 percent. We include match (worker-…rm) …xed e¤ects and thus identify the e¤ect from individuals who stay in the same …rm after the reform. Results are therefore not driven by changes in employment composition, and are supportive of education and skill becoming more valuable after the reform.
Deregulating firm entry is usually good for firms. But what about their workers? This column pres... more Deregulating firm entry is usually good for firms. But what about their workers? This column presents new research on the deregulation of firm entry and how it affects different types of workers. Using a natural experiment from Portugal, the evidence suggests that deregulating firm entry appears to boost competition and employment (and possibly aggregate income) but its gains seem largely to be reaped by better-off, better-educated workers.
This Discussion Paper is issued under the auspices of the Centre's research programme in INTERNAT... more This Discussion Paper is issued under the auspices of the Centre's research programme in INTERNATIONAL TRADE AND REGIONAL ECONOMICS. Any opinions expressed here are those of the author(s) and not those of the Centre for Economic Policy Research. Research disseminated by CEPR may include views on policy, but the Centre itself takes no institutional policy positions. The Centre for Economic Policy Research was established in 1983 as an educational charity, to promote independent analysis and public discussion of open economies and the relations among them. It is pluralist and nonpartisan, bringing economic research to bear on the analysis of medium-and long-run policy questions. These Discussion Papers often represent preliminary or incomplete work, circulated to encourage discussion and comment. Citation and use of such a paper should take account of its provisional character.
When the Asia Pacific Economic Cooperation (APEC) formally adopted the principle of "open regiona... more When the Asia Pacific Economic Cooperation (APEC) formally adopted the principle of "open regionalism" (OR) in its trade liberalization in 1991, many were optimistic that this approach suggested the bloc as a stepping stone toward global free trade. This optimistic view was reinforced by the economic theorizing of Sang-Seung Yi (1996). This paper shows formally via a simple model why OR may fail. We unpick Yi (1996) systematically and explain that OR works in his model because of quasilinear preferences and Ricardian technology assumptions. Once these assumptions are replaced with constant elasticity of substitution (CES) preferences and increasing marginal costs, OR fails to ensure global free trade as an equilibrium when the world consists of a country that is sufficiently larger than the rest of the world.
New Zealand's new Recognised Seasonal Employer (RSE) program allows workers from the Pacific Isla... more New Zealand's new Recognised Seasonal Employer (RSE) program allows workers from the Pacific Islands to come to New Zealand for up to seven months to work in the horticulture and viticulture industries. One of the explicit objectives of the program is to encourage economic development in the Pacific. In this paper we report on the results of a baseline survey taken in Vanuatu, which allows us to examine who wants to participate in the program, and who is selected amongst those interested. We find the main participants are males in their late 20s to early 40s, most of whom are married and have children. Most workers are subsistence farmers in Vanuatu and have not completed more than 10 years of schooling. Such workers would be unlikely to be accepted under existing migration channels. Nevertheless, we find RSE workers from Vanuatu to come from wealthier households, and have better English literacy and health than individuals not applying for the program. Lack of knowledge about the policy and the costs of applying appear to be the main barriers preventing poorer individuals applying.
While barriers to trade in most goods and some services including capital flows have been reduced... more While barriers to trade in most goods and some services including capital flows have been reduced considerably over the past two decades, many remain. Such policies harm most the economies imposing them, but the worst of the merchandise barriers (in agriculture and textiles) are particularly harmful to the world's poorest people, as are barriers to worker migration across borders. This paper focuses on how costly those anti-poor trade policies are, and examines possible strategies to reduce remaining distortions. Two opportunities in particular are addressed: completing the Doha Development Agenda process at the World Trade Organization (WTO), and freeing up the international movement of workers. A review of the economic benefits and adjustment costs associated with these opportunities provides the foundation to undertake benefit/cost analysis required to rank this set of opportunities against those aimed at addressing the world's other key challenges as part of the Copenhagen Consensus project. The paper concludes with key caveats and suggests that taking up these opportunities could generate huge social benefit/cost ratios that are considerably higher than the direct economic ones quantified in this study, even without factoring in their contribution to alleviating several of the other challenges identified by that project, including malnutrition, disease, poor education and air pollution.
gravity model suggest that 1990s Affected Trade? the "new wave" of regionalism has not boosted Is... more gravity model suggest that 1990s Affected Trade? the "new wave" of regionalism has not boosted Isidro Soloaga intra-bloc trading significantly. America did have a positive impact on the imports of bloc members, although MERCOSUR's exports did poorly over the mid-I 990s.
This paper introduces four versions of an international bilateral migration stock database for 22... more This paper introduces four versions of an international bilateral migration stock database for 226 by 226 countries and territories. The first three versions each consist of two matrices, the first containing migrants defined by country of birth, i.e. the foreign-born population, the second, by nationality, i.e. the foreign population. Wherever possible, the information is collected from the 2000 round of censuses, though older data are included where this information was unavailable. The first version of the matrices contains as much data as could be collated at the time of writing but also contains gaps. The later versions progressively employ a variety of techniques to estimate the missing data. The final matrix, comprising only the foreign-born, attempts to reconcile all of the available information to provide the researcher with a single and complete matrix of international bilateral migrant stocks. The final section of the paper describes some of the patterns evident in the database.
There are no satisfactory ex post estimates of the effects of regional integration on excluded co... more There are no satisfactory ex post estimates of the effects of regional integration on excluded countries' welfare. Using a formal decomposition of welfare, this paper discusses the factors that might affect these countries' welfare and aspects of their measurement. It then surveys various ex ante estimates of the effects of European integration. These suggest that neighboring countries linked tightly to the European economy could lose significantly from the latter's integration, but that for other countries the losses are likely to be very small.
... 5) discuss the problem in general, and Brenton and Winters (1990) show that if we require bot... more ... 5) discuss the problem in general, and Brenton and Winters (1990) show that if we require both reasonably general substitutions at the top level of the hierarchy and the ... Hence, we define two broad groups - 'rich' and 'poor ' - and allocate suppliers according to income levels. ...
... Thanks are due to Douglas Jay, David Mayes, Ann Morgan, John Rhodes, Peter Robson andJohn Wil... more ... Thanks are due to Douglas Jay, David Mayes, Ann Morgan, John Rhodes, Peter Robson andJohn Williamson for comments on an earlier draft of this paper. Page 2. ... SHARES OF IMPORTS RATION OF IMPORI'S 'I'O GDPI' E<:(6) EFrA and REST OF IRELAND THE WORLD ...
Rich countries' agricultural trade policies are the battleground on which the future of the WTO's... more Rich countries' agricultural trade policies are the battleground on which the future of the WTO's troubled Doha Round will be determined. Subject to widespread criticism, they nonetheless appear to be almost immune to serious reform, and one of their most common defenses is that they protect poor farmers. Our findings reject this claim. The analysis conducted here uses detailed data on farm incomes to show that major commodity programs are highly regressive in the US, and that the only serious losses under trade reform are among large, wealthy, farmers in a few heavily protected subsectors. In contrast, analysis using household data from 15 developing countries indicates that reforming rich countries' agricultural trade policies would lift large numbers of developing country farm households out of poverty. In the majority of cases these gains are not outweighed by the poverty-increasing effects of higher food prices among other households. Agricultural reforms that appear feasible, even under an ambitious Doha Round, achieve only a fraction of the benefits for developing countries that full liberalization promises, but protect the wealthiest US farms from most of the rigors of adjustment. Finally, the analysis conducted here indicates that maximal trade-led poverty reductions occur when developing countries participate more fully in agricultural trade liberalization.
... effects of trade protection and its removal on the performance of firms and industries in dev... more ... effects of trade protection and its removal on the performance of firms and industries in developing ... Without such prioritization the case for increased attention being given to trade is weak. ...technologya conduit for technology transfer/diffusionand by forcing domestic firms to ...
This paper studies the effect of competition on executive compensation. We estimate the effect of... more This paper studies the effect of competition on executive compensation. We estimate the effect of increased product market competition on the performance-pay sensitivity of CEOs, and contrast it with the effect for department managers and other workers in the corporation. We use a recent reform that simplied firm entry regulation in Portugal as a quasi-natural experiment. The empirical strategy exploits the staggered implementation of the reform across municipalities. Using linked employer-employee data for the universe of workers and firms, we show that increased product market competition, following the deregulation, decreased the sensitivity of pay to performance of CEOs and other managers, with no significant effects found for other workers. These findings are consistent with existing theoretical results in a principal-agent framework that a fall in entry costs leads to weaker managerial incentives.
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Papers by L. Winters