Matilde Bombardini


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Graduate Student Supervision

Doctoral Student Supervision (Jan 2008 - Nov 2020)
Essays on strategic advocacy and influence in rulemaking (2019)

Politicians and regulators rely on external expertise when setting policies, providing an opportunity for interest groups to influence government policy with persuasive information. This process forms the foundation of many models of lobbying and special interest politics, but is very difficult to study empirically. I use data from U.S. Federal rulemaking process to create new measures of influence, revealing that U.S. corporations use charitable donations to non-profits to influence regulators, and opening up possibilities for future research.In Chapters 1 and 2, I present co-authored research on the relationship between strategic advocacy in rulemaking and corporate philanthropy. For-profit corporations and non-profit entities are active in the rulemaking process and are arguably expected to provide independent viewpoints. However, non-profits also receive grants from firms with an interest in the outcomes of the regulatory process. Chapter 1 shows that corporations give large amounts of money to non-profits that participate in the rulemaking process and that, shortly after a firm donates to a non-profit, the non-profit is more likely to comment on rules for which the firm has also provided a comment. Chapter 2 extends the study of firms and non-profits to include the text content of regulatory comments, and the regulators response in the final rule. We find that, when a firm comments on a rule, the comments by non-profits that recently received grants from the firm’s foundation are systematically closer in content similarity to the firm’s own comments than to those submitted by other non-profits commenting on that rule. And, when a firm comments on a new rule, the discussion of the final rule is more similar to the firm’s comments when the firm’s recent grantees also comment on that rule. These patterns suggest that corporations strategically deploy charitable grants to induce non-profit grantees to make comments that favor their benefactors.In Chapter 3, I present a new technique for estimating influence of comments on final rules that improves on the approach used in Chapter 2. These new estimators can also control for each author's writing style with fixed effects.

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Essays on factor misallocation (2018)

This thesis studies different implications of micro-level factor misallocation across heterogeneous agents. It consists of three chapters.The first chapter examines the impact of firm-level factor misallocation on an open economy’s comparative advantage. After providing empirical evidence on how Colombian metrics of firm-level misallocation are related to measures of its revealed comparative advantage, I explore the general equilibrium effects of such misallocation and its impact on industries' export capabilities. I compute a counterfactual equilibrium in which the misallocation is removed in Colombia. The reallocation of factors leads to an important change in the country's industrial structure and a rise in the exports-to-GDP ratio of 18 p.p. This industrial composition effect is absent in the workhorse models of firm-level factor misallocation under closed economies.Based on a co-authored paper with Tomasz Święcki, the second chapter studies the origin of the income gaps between agricultural and non-agricultural workers in developing countries. We use Indonesian data to document a robust premium for workers who move out of agriculture and a loss for those who move into agriculture, even if they do not migrate. We argue that to generate simultaneously these within-worker premia and the main moments of the joint sector-income distribution over time, self-selection needs to take place under barriers to sectoral mobility that misallocate workers across sectors. We find that removing such barriers prompt 30% of the workforce to reallocate and aggregate output to increase by 17%. The third chapter extends the standard model of firm-level factor misallocation in a closed economy in two dimensions. First, I introduce idiosyncratic demand shocks. This allows me to evaluate whether metrics of misallocation predict plants' survival, a test used to claim that misallocation metrics are empirically swamped by demand shocks. I argue that unconditional estimates in this test are biased in the presence of firms' selection, which would explain the puzzling empirical findings. Second, I compute the TFP gains of removing misallocation both within and across industries. I quantify the importance of inter-industry misallocation and explore its potential role in explaining TFP gaps across countries.

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International trade and firm performance (2018)

This dissertation is a collection of three essays that study the effect of opening to trade, especially opening to the import market, on firm performance.The first essay (Chapter 2) explores the link between innovation and import competition in China, a country that during the period we study (2000-2007) saw both a rapid increase in patenting and a lowering of import barriers due to accession to the WTO. Combining manufacturing firm survey data with customs and patent data, we find that import competition encouraged innovation, but only for the most productive firms. These top firms saw an increase in patenting rate of 3.6% for every percentage point drop in import tariffs. The result is quantitatively similar whether we use a sector-wide tariff on output or a weighted tariff at the firm level as a measure of import competition. Consistent with the main finding, top firms also feature increased R&D expenditures and an increase in domestic sales following import liberalization.To analyze the mechanism and welfare implications underlying our empirical findings about China, the second essay (Chapter 3 and 4) builds a model. Firms engage in monopolistic competition across varieties and neck-and-neck competition within each variety. An increase in the neck-and-neck competition reduces the expected profit of not innovating, thus encouraging firms to innovate more to escape the competition. We analyze the efficiency and utility implications using a simple version of the model in Chapter 4.The third essay (Chapter 5) examines the relationship between Canadian manufacturing firms' import behavior and their performance. The focus is on two aspects of import structure, input variety and the dynamics of import relationships. Firms importing more products from a larger set of suppliers tend to be larger, more productive, and more successful in export markets. Not only the number, but also the duration of supply relationships matters. Firms maintaining a higher share of continuous supply relationships also benefit in size and productivity. These results suggest that the breadth and depth of the import network are relevant factors for the performance of Canadian manufacturers.

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Essays on China's International Trade (2016)

This dissertation studies the impact of international trade on China along different dimensions. The first chapter investigates how the decline in trade barriers and the resulting export expansion affected human capital accumulation in China. Following a theoretically consistent approach, I exploit variations in regional exposures to high- and low-skill export demand shocks, which stems from the diverse initial industry composition across prefectures, and differential skill intensities across industries. I find that high-skill export shocks raise both high school and college enrollments, while low-skill export shocks depress both. The amplified differences in skill abundance across prefectures reinforce the initial industry specialization. These findings suggest a mutually reinforcing relationship between regional comparative advantage and skill formation. The second chapter examines the impacts of export expansion on air pollution and health outcomes in China. To disentangle trade-induced scale and composition effects from technique effect, I construct two export shocks at the prefecture level: (i) PollutionExportShock represents the pollution content of export expansion measured in pounds of pollutants per worker; (ii) ExportShock measures the export exposure in dollars per worker. The two measures differ because prefectures specialize in different products: while two prefectures may experience the same shock in dollar terms, the one specializing in dirty industries has a larger PollutionExportShock. I find that a higher PollutionExportShock increases both pollution and mortality. A higher ExportShock tends to reduce pollution and mortality, but the effect is not always statistically significant. I also provide evidence that export expansion affects mortality through the channel of air pollution. The third chapter provides evidence that over-export of grains aggravated China's Great Famine. I exploit cross-county variation in grain export exposure which stems from their differences in suitability of cultivating different crops that experienced variable export shocks in early famine years. I find that a county's suitability in high-export-exposure crops is positively associated with its famine severity. However, the correlation is statistically insignificant for low-export-exposure crops. Moreover, for high-export-exposure crops, the correlation between suitability and famine severity declines with distance to railroad. These patterns are consistent with the possibility that excessive grain exports severely reduced food availability for domestic consumption.

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Worker-Firm Matching in a Global Economy (2015)

This thesis investigates the impact of international trade on the sorting patterns of workers across firms and analyzes the implications for welfare. The first essay builds a model of matching between heterogeneous workers and firms in presence of search frictions. Variation in the worker type at the firm level exists in equilibrium only because of search costs. When firms gain access to foreign markets their revenue potential increases. When stakes are high, matching with the right worker becomes particularly important because deviations from the ideal match quickly reduce the value of the relationship. Hence exporting firms select sets of workers that are less dispersed relative to the average. The second essay documents the difference in the sorting patterns of workers between exporters and non-exporters in a French matched employer-employee dataset. We proxy the type of each worker using her average wage over her job spells and construct measures of the average type and type dispersion at the firm level. We find that exporting firms tolerate a lower dispersion in the pool of workers they hire. The matching between exporting firms and workers is even tighter in sectors characterized by better exporting opportunities as measured by foreign demand or tariffs. We also confirm the conjecture in the literature that exporters pay higher wages because, among other factors, they employ better workers. The final chapter explores the implications for wage inequality using the French Employer-Employee Data. We find that the differences in sorting in large part account for the existing differences in the wage structure between exporters and non-exporters. Exporting firms tend to have higher wages but tolerate a lower dispersion. Using an alternative theory-based measure of residual wage inequality, we also find that the unexplained component tends to be smaller in exporting and more productive firms, even when controlling for some differences in workforce composition. This finding suggests that exporters are better able to overcome frictions in the labour market in order to move closer to their ideal worker.

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Essays in International Trade (2011)

This dissertation consists of three chapters in the eld of international trade. The rst two, jointly written with Matilde Bombardini and Giovanni Gallipoli, explorethe role of skill dispersion as a source of comparative advantage. The first chapterpresents a tractable multi-country, multi-sector model of trade with search frictionsin which comparative advantage derives from (i) cross-sectoral differences inthe substitutability of workers’ skills and (ii) cross-country differences in the dispersionof skills in the working population. We provide conditions under whichhigher skill dispersion triggers specialization in sectors characterized by highersubstitutability among workers’ skills.The second chapter explores the empirical relevance of skill dispersion as adeterminant of the pattern of trade across industries. The analysis relies on microdatafrom the International Adult Literacy Survey to construct measures of skilldispersion. Results indicate that the latter has a significant effect on the pattern oftrade across industries, of a magnitude comparable to the aggregate endowmentsof human and physical capital. The result is robust to the controls for other proximatecauses of comparative advantage, such as institutional quality and flexibilityof labour markets.The third chapter offers a relatively unconventional approach to the empiricalanalysis of the factors that determine export decisions at the firm level, by exploring whether the characteristics of firms geographically located close to each otherplay a role in shaping their individual entry decisions. In particular, I develop anempirical framework to study whether export participation decisions of individualfirms are influenced by non-market interactions (e.g. learning or imitation) withfirms that belong to a common reference group. The main testable hypothesis isthat, in the presence of entry costs, group composition affects the degree of statedependence of individual export decisions. This proposition is tested by applying adynamic panel data estimator to a data set of Argentine manufacturing firms. Thefindings show that group composition influences individual export decisions. Mostof this effect is channelled through entry costs. Firms benefit from proximity toproductive firms but not from proximity to other exporters.

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Essays in international trade, political economy of protection and firm heterogeneity (2008)

The first two chapters study the effect of foreign lobbies on trade policy of a country which is a member of a Free Trade Agreement (FTA). They rely on a monopolistically competitive political economy model in which the government determines external tariffs endogenously. In the first paper the effect of foreign lobbying under the FTA is examined empirically using Canadian industry-level trade data that allow differentiating of lobby groups by the country of origin. The analysis suggests that the presence of foreign lobbying has a significant effect on the domestic trade policy: the presence of an organized lobbying group in an FTA partner country tends to raise trade barriers while an organized lobbying group of exporters from outside of the FTA is associated with less protection. The second paper analyses political viability of FTAs and their effect on the world trading system in the presence of lobbying by organized foreign interest groups. I show that the FTA in the presence of an organized lobby group in a prospective partner country may cause an increase in the level of protection against imports from third countries and impede trade with non-member countries. I also find that foreign lobby may encourage the local government to enter a welfare-reducing trade-diverting FTA. Finally, I show that the FTA increases the lobbying power of the organized lobby groups of the member countries, which can potentially obstruct the viability of welfare-improving multilateral trade liberalization.The last paper shows that the reason for a higher capital-labor ratio observed for exporting firms is a higher capital intensity of their production technology. Exporters are more productive, more likely to survive and, hence, more likely to repay loans. A higher repayment probability causes creditors to charge lower interest rate and reduces the marginal cost of the firm when a more capital-intensive technology is used. Here, a reduction in international trade costs stimulates exporting firms to use more efficient capital-intensive technologies, while non-exporters switch to less capital-intensive ones. This within-industry change in the composition of technologies reinforces the productivity advantage of exporters and contributes further to industry-wide productivity improvement. The results of model simulations highlight that to 10% of welfare and productivity gains of trade liberalization come from the adoption of new technologies by existing firms in the industry, thus amplifying the effect of resource reallocation from firms' entry and exit.

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