Сonference Program

Abstracts of keynote presentations: 

We develop a new methodology to estimate the elasticity of urban costs with respect to city population using French house and land price data. After handling a number of estimation concerns, we find that the elasticity of urban cost increases with city population with an estimate of about 0.03 for an urban area with 100,000 inhabitants to 0.08 for an urban area of the size of Paris. Our approach also yields a number of intermediate outputs of independent interest such as the share of housing in expenditure, the elasticity of unit house and land prices with respect to city population, and distance gradients for house and land prices.

Lorenzo Caliendo (Yale). Goods and Factor Market Integration: A Quantitative Assessment of the EU Enlargement.
(coauthors: Luca D. Opromolla, Fernando Parro and Alessandro Sforza)

The economic effects from labor market integration are crucially affected by the extent to which countries are open to trade. In this paper we build a multi-country dynamic general equilibrium model to study and quantify the economic effects of trade and labor market integration in the context of the 2004 European Union enlargement. In our model, trade is costly and features households of different skills and nationalities facing costly forward-looking relocation decisions. We use the EU Labour Force Survey to construct migration flows by skill and nationality across 17 countries and a constructed rest of the world for the period 2002-2007. We exploit the timing of the change in policies due to the 2004 EU enlargement to identify the corresponding changes in labor mobility costs. We apply our model and use these estimates, as well as the observed changes in tariffs, to quantify the effects from the EU enlargement. We find that new member state countries are the largest winners from the EU enlargement, and in particular low-skilled labor. We find smaller welfare gains for EU-15 countries. However, in the absence of changes to trade policy, the EU-15 would have been worse off after the enlargement. We study even further the interaction effects between trade and migration policies, the importance of the timing of migration policy, and the role of different mechanisms in shaping our results. Our results highlight the importance of trade for the quantification of the welfare and migration effects from labor market integration.

Andrés Rodríguez-Clare (UC Berkeley). External Economies of Scale and Industrial Policy: A View from Trade.

(coauthors: Dominick Bartelme, Arnaud Costinot, and Dave Donaldson)

We develop a new empirical strategy to estimate external economies of scale using trade data. Across 2-digit sectors, we find scale elasticities ranging from 0.02 to 0.20 and averaging 0.13. We then use our estimates of external economies of scale across sectors to explore the structure and implications of optimal industrial policy. We find that gains from optimal industrial policy are only around 0.2% on average across the countries in our sample – this is small relative to the gains from optimal trade policy, which are around 0.8% on average.