Winners and Losers from Globalization and Market Integration: Insights from Micro-Data (WLG-Micro)

Globalization, and market integration more generally, has created winners and losers around the world. Recent political events (e.g. US elections and Brexit) show that many people are concerned and demand policies to stop globalization through new trade barriers and limits on free movement of people. Research on the precise impact of globalization and market integration has been constrained by measurement and data problems. Theoretical and empirical models using aggregate data failed to capture detailed heterogeneous effects. Identifying precise impact mechanisms or causality is complicated when other factors (such as technological change) occur simultaneously. Our project wants to improve impact analysis using unique and new detailed micro-data (at the firm-, region-, and household-level) and state-of-the art micro-econometric techniques. Our project's focus is global (covering many countries, both rich and poor) and local (with the use of micro-data) at the same time. We use a modern view of market integration — i.e. that trade is more than a flow of goods – by integrating local and global value chains into our analysis, taking into account embedded technology transfer and product and process requirements. In combination, this will allow to identify impact at the level of firms, sectors, regions and households, accounting for the complexity of the impact mechanisms.