Primary Research Focuses: Macroeconomics, International Trade, and Growth

Secondary Research Focuses: Productivity and Entrepreneurship

References: 

• Erik Hurst (Co-chair)
• Esteban Rossi-Hansberg (Co-chair)
• Ufuk Akcigit

Job Market Paper: "Old Roots, New Routes: The Trade Patterns of Immigrant-Founded Firms"

[Abstract] We study how immigrant founders shape U.S. international trade by linking administrative records on firms’ customs transactions and their founders’ countries of birth. We show that immigrant-founded firms are 1.2 percentage points more likely to import, devote 20 percentage points more of their imports to their founders’ birth countries, and pay 16% lower prices for the same products there. These price gaps shrink sharply among firms buying from the same supplier, suggesting that founders’ knowledge helps them find cheaper suppliers. We build a model of migration, occupational choice, and sequential supplier search in which entrepreneurs differ in talent and search costs vary by founder origin and supplier country. Using differences across founder origins in sourcing, import prices, entrepreneurship rates, and firm scale, we estimate that immigrant founders’ search-cost advantages are worth roughly one-tenth of U.S. gains from trade, holding productivity and other incentives for entrepreneurship fixed. Trade liberalization makes these sourcing advantages more valuable, intensifying competition for native entrepreneurs and limiting natives’ welfare gains. Tariffs erode these advantages, easing competition and cushioning natives’ welfare losses.