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Tourism is one of the most visible and fastest growing facets of globalization in developing countries. This paper combines a rich collection of Mexican microdata with a quantitative spatial equilibrium model and a new empirical strategy to learn about the long-run economic consequences of tourism. We begin by estimating a number of reduced-form effects on local economic outcomes in today's cross-section of Mexican municipalities. To base these estimates on plausibly exogenous variation in long-term tourism exposure, we exploit geological and oceanographic variation in beach quality along the Mexican coastline to construct instrumental variables. To guide the estimation of the aggregate implications of tourism, we then write down a spatial equilibrium model of trade in goods and tourism services, and use the reduced-form moments to inform its calibration for counterfactual analysis. We find that tourism causes large and significant local economic gains relative to less touristic regions, and that these gains are in part driven by significant positive spillovers on manufacturing production. In the aggregate, however, we find that these local spillovers are largely offset by reductions in agglomeration economies among less touristic regions, so that the national gains from tourism are mainly driven by a classical market integration effect.

Zonder onderwerpscode: economie

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The arrival of global retail chains in developing countries is causing a radical transformation in the way that households source their consumption. This paper draws on a new collection of Mexican microdata to estimate the effect of foreign supermarket entry on household welfare. The richness of the microdata allows us to estimate a general expression for the gains from retail FDI, and to decompose these gains into several distinct channels. We find that foreign retail entry causes large and significant welfare gains for the average household that are mainly driven by a reduction in the cost of living. About one quarter of this price index effect is due to pro-competitive effects on the prices charged by domestic stores, with the remaining three quarters due to the direct consumer gains from shopping at the new foreign stores. We find little evidence of significant changes in average municipality-level incomes or employment. We do, however, find evidence of store exit, adverse effects on domestic store profits and reductions in the incomes of traditional retail sector workers. Finally, we show that the gains from retail FDI are on average positive for all income groups but regressive, and quantify the opposing forces that underlie this finding.

Zonder onderwerpscode: economie

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E-commerce markets are rapidly growing in the developing world, but this growth has until recently been limited to urban areas. Inspired by growth in cities and numerous case studies on the transformative effect of e-commerce trading on rural markets, policy makers are now targeting large investments to expand access to e-commerce outside of cities. In this paper, we investigate the effect of the first nationwide e-commerce expansion program on household welfare and the underlying channels at work. The program invests in the necessary logistics to ship products to and sell products from tens of thousands of Chinese villages that were largely unconnected to e-commerce. Our analysis combines a new collection of survey and administrative microdata with a randomized control trial (RCT) that we implement across villages in collaboration with a large e-commerce firm. We find that the gains from e-commerce trading are sizable, but only accrue to a minority of rural households who tend to be younger and richer. In contrast to the existing case study evidence that has motivated these policies, we find little evidence for significant income gains to the average rural producer or worker. Instead, the gains are driven by the consumption side, through a significant reduction in household cost of living that is most pronounced in more remote rural markets. Our results also suggest that these effects are mainly due to overcoming the logistical barriers to e-commerce in rural markets, rather than to additional investments targeted at adapting e-commerce to the rural population.

Zonder onderwerpscode: economie

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A growing literature has documented the role of firm heterogeneity within sectors for nominal income inequality. This paper explores the implications for household price indices across the income distribution. Using detailed matched US home and store scanner microdata, we present evidence that rich and poor households source their consumption from different parts of the firm size distribution within disaggregated product groups. We use the data to examine alternative explanations, propose a tractable quantitative model with two-sided heterogeneity that rationalizes the observed moments, and calibrate it to explore general-equilibrium counterfactuals. We find that larger, more productive firms endogenously sort into catering to the taste of richer households, and that this gives rise to asymmetric effects on household price indices. We quantify these effects in the context of policy counterfactuals that affect the distribution of disposable incomes on the demand side or profits across firms on the supply side.