On Persistent Poverty in a Rich Country (with T. Islam and J. Ziliak, Southern Economic Journal 2014)
We examine differences in income within the U.S., and the regions of persistent poverty that have arisen,
using a newly assembled dataset of counties that links historical 19th century Census data with contemporaneous
data. The data, along with an augmented human capital growth model, permit us to identify the roles of
contemporaneous differences in aggregate production technologies and factor endowments, in conjunction with
the historical roles of institutions, culture, geography, and human capital. We allow for possible
cross-county factor mobility via a correlated random effects GMM estimator that identifies simultaneously
the coefficients on time varying and time-invariant determinants of income. We find evidence of significant
regional differences in production technologies, but our decompositions of the poor/non-poor income gap
suggests that at least three fourths of the gap is explained by differences in productive factors.
Persistently poor counties are different (and poorer) primarily because they have lower levels of factors
of production, not because they use the factors they have less efficiently. While much of the income
difference is explained by contemporary factors, the contribution of historical levels of human capital is
surprisingly large. The combined contribution of historical and contemporary human capital is striking:
together, they explain nearly 60 percent of the overall income gap between the persistently poor and non-poor
On the Robustness of Coefficient Estimates to the Inclusion of Proxy Variables
(with C. Bollinger, Journal of Econometric Methods 2014)
This paper considers the most effective use of multiple proxy measures for the same unobserved
variable. It extends the results of Lubotsky and Whittenberg (2006) to examine the impact of
proxy variables on correctly measured variables. We find that including all proxy variables
in the regression minimizes the bias on all other coefficients in the regression. Unlike previous
results, estimates of coefficients on other regressors do not require a scaling assumption. We
derive a set of bounds based on results from Klepper and Leamer (1984) and Bollinger (2003) for parameters
in the model, and compare these results to extreme bounds analysis. We find through Monte Carlo
simulations that our bounds perform better than extreme bounds in most circumstances. We also find that
our results may overturn many of the results found through extreme bounds analysis. We conclude with an
empirical example from the cross-country growth literature in which human capital is measured through three
proxy variables: literacy rates and enrollment in primary and secondary school. We find that the coefficient
estimate on initial income is "robust," as previous extreme bound analyses have concluded. However,
in contrast to previous results, we find that the coefficient estimate on investment cannot be distinguished
from zero, while that on population growth is robustly statistically different from zero.
When is Trade Protection Good for Growth? (with B. Unel, Economic Inquiry 2013)
The empirical relationship between trade protection and economic growth is surprisingly fragile, as shown in a
number of other papers. We address one possible explanation for these findings: that the relationship is
contingent on the pattern of comparative advantage, following the endogenous growth literature.
Our findings suggest that such contingencies do in fact exist - in particular, the correlation between
tariffs and growth is strong and positive for skill-abundant countries - and are robust to the choice of
TRADE AND/OR ENVIRONMENTAL POLICY
Trade Policy in Majoritarian Systems: The case of the U.S. (with P. Fredriksson and X. Matschke, Canadian Journal of Economics 2011)
We provide a theory of trade policy determination that incorporates the protectionist bias inherent in
majoritarian systems, suggested by Grossman and Helpman (2005). The prediction that emerges is that in
majoritarian systems, the majority party favors industries located disproportionately in majority districts.
We test this prediction using U.S. tariff data and Congressional campaign contribution data from the period 1989 to 1996.
We find evidence of a protectionist bias due to majoritarian system politics that is
comparable in magnitude to the payoff from being an organized industry.
Where the Girls Are: Trade and labor market segregation in Colombia (with J. Ederington and K. Troske, IZA Discussion Paper no. 4131, under review)
Gary Becker's theory of discrimination argues that increasing competition
will reduce discrimination in the labor market. We use the Colombian trade
liberalization episode over the period 1984-91 to investigate this claim on
plant-level data in three ways. First, we examine whether women are
concentrated in exporting plants. Second, we examine whether the increase in
foreign competition due to unilateral trade liberalization
disproportionately drove discriminating plants out of the market. Finally,
we investigate whether trade liberalization affected hiring decisions (and
thus gender segregation) by Colombian firms.
Game Over? The effect of NAFTA on campaign contributions (with J. Ederington and X. Matschke, in progress)
An emerging line of theoretical work on "politically viable" trade agreements has proposed the potential rent destruction effect of free-trade agreements (FTAs),
or the potential for an FTA to reduce incentives for lobbying by committing a country to free trade. In this paper, we investigate the impact of the 1994 signing of the
North American Free Trade Agreement (NAFTA) on campaign contributions. We find that after 1994, lobbying contributions decreased most in those industries most integrated
with Mexico, consistent with the rent-destruction hypothesis. Our empirical procedure then allows us to uncover which contributions are correlated with this NAFTA lobbying and
thus the recipients of "NAFTA contributions."
Environmental Policy in Majoritarian Systems (with P. Fredriksson and X. Matschke, Journal of Environmental Economics and Management 2010)
This paper sheds new light on the determination of environmental policies in
majoritarian federal electoral systems such as the U.S., and derives implications
for the environmental federalism debate on whether the national or local government
should have authority over environmental policies. In majoritarian systems, where
the legislature consists of geographically distinct electoral districts, the majority
party (at either the national or state level) favors its own home districts; depending on the
location of polluting industries and the associated pollution damages, the majority party
may therefore impose sub-optimally high or low pollution taxes due to a majority bias.
We show that majority bias can influence the social welfare ranking of alternative government
policies and, in some cases, may actually bring distortionary policies closer to the first-best
Last update: August 2012