Essays on International Trade, Economic Development, and Labor Economics
Open AccessThis dissertation consists of three essays addressing three main challenges in developing economies: trade shocks, state-owned enterprises, and gender discrimination. I investigate the impact of trade and policy shocks on firms and individuals using evidence from Iran, a large developing country that has not been studied, mainly due to the lack of data. Though the trade and policy shocks studied in the dissertation are specific to the case of Iran, the models and mechanisms developed here can be applicable to the case of other developing nations.The first chapter, "Adapting to Sanctions: Evidence from Firm Response and Market Reallocation in Iran," investigates firm responses to international trade sanctions. Although the macroeconomic effects of trade sanctions have been extensively studied, little is known about how trade sanctions shape firm dynamics and their heterogeneous effects in a targeted country. Exploring detailed surveys of Iranian manufacturing firms, I examine firm-level asymmetric effects of the 2012–2013 US and EU trade sanctions imposed against Iran in response to its nuclear program. Empirical analysis shows that the sanctions cut Iranian firms’ exports in half and its imports by more than 30% and, on average, reduced firm-level productivity, profit, revenue, and employment. Intriguingly, however, exporting firms were found to mitigate the negative effects of sanctions through an increased presence in the domestic market, thereby transferring sanction shocks to non-exporting firms. At the same time, importing firms responded to sanctions by sourcing more domestic inputs at the expense of non-importing firms. Based on a stylized model featuring heterogeneous firms with capacity constraints, I show that the export sanctions increased consumer welfare by 4.35% with decreasing domestic prices for a given income level. In contrast, import sanctions led to a 7.5% consumer welfare loss by increasing prices. The stylized model implies that alleviating exporting firm capacity constraints during adverse trade shocks increases positive impacts through export channels. The second chapter, "How do SOEs Adjust During Downturns? Evidence From Iranian Manufacturing Firms", co-authored with Priscilla Toffano (IMF), investigates the role Iranian state-owned enterprises (SOEs) played when international economic sanctions were imposed on Iran. Using difference-in-difference techniques and exploiting rich survey data on the manufacturing sector, the analysis shows that sanctions reduced revenues, profits, and productivity of both SOEs and private firms in targeted industries, with larger impacts on SOEs. Differently from private firms, wages and employment levels increased in SOEs in the aftermath of the sanctions, suggesting that, similarly to other countries, SOEs in Iran were used to protect employees during the period of economic crisis. In terms of distributional impacts, men were the hardest hit by the sanctions shock in private firms but benefited the most from the increase in wages in SOEs. Women in SOEs did not benefit from the same dynamics. The third chapter, "Good from Far but Far from Good: The Impact of a Female Employment Reform in Iran," co-authored with Maggie Chen (GWU), examines the impact of a law targeting a specific group of women. Family-friendly policies have been established in almost all countries, supporting the work-life balance of employees by providing them with benefits such as parental and family leaves. In 2016, the Iranian Parliament passed a law that reduces the working hours of mothers with children under the age of six and female heads of households while protecting them from low pay and job loss. However, by requiring employers to pay full-time wages, the law disincentives them to hire this group of women, resulting in increased unemployment. We discovered that the law successfully lowered women’s working hours by 18 minutes per week while protecting them from low pay and job loss by exploring Iranian household income and expenditure surveys from 2013 to 2018. However, the unemployment rate of this group of women increased by 0.5% because employers were reluctant to hire them. Furthermore, we showed that if these women were a household’s primary source of income, the law could reduce the household’s income and expenditures by 30%. Also, we argued that the law was more effective on women who resided in cities and worked in the non-agricultural sector since contracts are more formal.
- All rights reserved
Notice to Authors
If you are the author of this work and you have any questions about the information on this page, please use the Contact form to get in touch with us.