Research

Fragmented land ownership and ill-defined property rights are key obstacles to large-scale industrial development in emerging economies. To facilitate private investment, governments increasingly rely on compulsory land acquisition policies. I study the effect of this practice on industrial composition and local employment, exploiting an unexpected reform that prohibited compulsory acquisition for Indian Special Economic Zones (SEZs). I pin down the effect on entry by constructing a novel dataset on the universe of SEZ proposals before and after the reform. First, I find that the share of manufacturing SEZ proposals, and the share of developed manufacturing SEZs, decreases by almost 50 percent. This effect is most pronounced for (a) more land-intensive industries and (b) areas with higher land fragmentation. Second, I study how restricting compulsory acquisition affects employment in and around SEZs, and find that manufacturing SEZs after the reform are associated with significantly higher local employment than SEZs before the reform. Despite the reduction in entry, post-reform manufacturing SEZs contributed four times more to aggregate employment than their pre-reform counterparts.

We use detailed historical data on India's domestic infrastructure to show how high domestic transport costs have conditioned the local labor market consequences of its drastic import tariff liberalization in the early 1990s. We find that districts located at larger distances from the country's main international gateways are better shielded from increased foreign import competition: non-agricultural employment falls less than in otherwise similarly exposed districts closer to one of the country's main ports. They, however, also benefit less from improved access to foreign intermediates: non-agricultural employment increases less than in districts with a similar input-output structure, but located closer to one of the country's main ports. Furthermore, we find substantial heterogeneity in these effects across the firm size distribution in district closer to India's main ports: the negative employment response to increased import competition is concentrated at small to medium firms, whereas employment at medium and large firms benefits most from better access to foreign intermediates.

This paper studies the interaction of matching frictions and intermediation in international trade in a general equilibrium model. Heterogeneous firms both decide whether to export and, if so, whether to use an intermediary or export directly. Matching frictions force direct exporting firms to invest in market penetration to reach foreign consumers, but intermediated firms face lower consumer demand. This trade-off generates productivity sorting in the export mode, where the most productive firms export directly, the least productive do not export and the moderately productive firms use an intermediary. The interaction of search frictions and intermediation can explain several well-established empirical regularities of trade networks. The main contribution consists of novel predictions on the response of intermediaries to trade liberalization: I show that intermediaries increase the number of products they export but reduce the product scope. Finally, I find evidence for this nontrivial pattern using World Bank firm-level survey data.