Essays on Factor Mobility and Economic Outcomes

This dissertation studies economic consequences of factor mobility in three different contexts. The first chapter deepens understanding of the effect of immigration on native wages in a setting where offshoring also takes place. It does so by relaxing restrictive assumptions of existing theoretical models on the nature of offshoring and showing that if a greater share of native than immigrant tasks is offshored, offshoring reinforces the impact of immigration. Using spatial approach and instrumental variable strategy to address potential endogeneity, empirical results show that the U.S. commuting zones that experienced greater offshoring change featured a magnified effect of immigration on wages of low-skilled native workers. The second chapter contributes to the economics literature by showing that immigrants can affect trade not just with their countries of origin, but also certain third party countries, and investigating which immigrants do that as well as the likely channels. The study provides evidence of both an inter-ethnic spillover effect (through the role of common spoken non-native language and geographic proximity) as a well as a special role of ethnic ties (through additional effect of common native language). The magnitude of the trade promotion effect of some third party country immigrant groups is comparable to the trade promotion effect of immigrants from trading partner country. The third chapter examines determinants of international differences in agricultural labor productivity. In particular, it focuses on the role of farm size distribution and policy distortions. The findings suggest that international labor productivity differences are mostly explained by differential input quantity and quality, while average farm size and farm size distribution do not have a significant effect conditional on input quantity and quality. This suggests that even if there is misallocation in the form of suboptimal input use in poor countries with smaller farms, it is likely less severe than suggested by hypotheses that assume larger farms are overall more productive. Additionally, price distortions analyzed do not appear to explain either farm size or productivity differences