Intensive Margin Research Articles

Wage Garnishment in the United States: New Facts from Administrative Payroll Records

Wage garnishment allows creditors to deduct money from workers’ paychecks to repay defaulted debts. We document new facts about wage garnishment between 2014 and 2019 using data from a large payroll processor that distributes paychecks to approximately 20 percent of US private-sector workers. By 2019, over 1 in every 100 workers was being garnished for delinquent debt. The average garnished worker experiences garnishment for five months, during which approximately 11 percent of gross earnings is remitted to their creditor(s). The beginning of a garnishment is associated with an increase in job turnover but no intensive margin change in hours worked. (JEL G51, J22, J63)

Exports, productivity and capital intensity: Evidence for Brazilian firms

Engaging in export activities is a key factor influencing firm performance. This paper explores the export-productivity and export-capital intensity relationship using firm-level data from the Brazilian manufacturing industry over the period 2007–2014. The empirical strategy combines Propensity Score Matching (PSM) and Differences in Differences (DD) methods and explores the fact that firms enter the external market at different moments, generating a variation in the period and permanence in international trade. We find static and dynamic effects on labor productivity, total factor productivity, and capital intensity. Firms that start exports experience an average productivity growth of about 5% and a 2% decrease in capital intensity compared to non-exporting firms. The permanence in the activity magnifies these impacts. After three periods, the growth (reduction) in productivity (capital intensity) is around 10.5% (4.7%). We identify heterogeneous effects, leading to variations in magnitude across dimensions such as technological intensity, size, age, ex-ante levels of productivity and capital intensity, and intensive margin of trade. We also show that firms become more labor intensive by demanding more skilled workers.

The impact of host country institutional quality on OFDI: Evidence from China

This paper is aimed at investigating the influence of the institutional quality of the host country on China's outward foreign direct investment (OFDI) from a binary margin perspective. The quality of the host country's system is assumed to have a positive impact on the extensive margin of OFDI in terms of political stability (PS), regulatory quality (RQ), the rule of law (RL), and the control of corruption (CC); however, such system quality inhibits the growth of the intensive margin via RQ, voice and accountability (VA). We further find that institutional differences and the extensive margin of OFDI have a negative relationship. Heterogeneity analysis shows that the host country's institutional quality significantly contributes to the extensive margin of investment when the host country is a non-low-income country, the investment is nongreenfield investment, and the industry invested in is the real estate industry. There is a moderating effect of investment motives on the relationship between host country institutional quality and OFDI where host country institutional quality positively affects the extent of investment when the investment motive is market seeking and negatively affects the extent of investment when the investment motive is natural resource seeking.

Empowered or impoverished: the impact of panic buttons on domestic violence

AbstractThis paper estimates the causal effect of a targeted panic button program—implemented in two Turkish provinces between 2012 and 2016—on domestic violence. Difference-in-differences and synthetic control estimates suggest that the program notably increased physical violence against women both at the extensive and intensive margins. The likelihood of physical violence in the treated provinces increased by more than 5 percentage points relative to the control provinces, and the number of physical violence incidents increased by about 10 percent. The increase comes almost entirely from the increase in violence against less-educated women. Employment rates and economic independence indicators improved for women in the treated provinces, which suggests that the program empowered vulnerable women. However, male partners increased physical violence in response to female empowerment. The results are consistent with the male backlash theories and a class of non-cooperative models incorporating violence as a vehicle for enhancing males’ bargaining power, but inconsistent with the models predicting that economic empowerment of women reduces violence by balancing bargaining power within the household. We also develop a method based on retrospective violence information to understand whether the increase is attributable to actual or self-reported violence and conclude that the estimates are entirely driven by the increase in actual violence.

Heterogeneous impact of non-tariff measures on import margins through global value chains: Firm-level evidence from China

Technical measures, such as sanitary and phytosanitary measures and technical barriers to trade were prevalent in the past decades and have induced an increasing number of trade disputes among countries. This paper investigates the impact of technical measures on Chinese firms’ import margins and trade unit values by focusing on how these impacts vary across firms with different positioning in the global value chains (GVCs). The analysis relies on panel data of Chinese firm-level imports over 2008–2013 and an original dataset on non-tariff measures provided by the United Nations Conference on Trade and Development (UNCTAD). The results show that the impact of technical measures differs across importer positioning in the GVC. While importers with a small downstreamness are negatively impacted by both intensive and extensive margins, technical measures benefit the firms located further downstream in the global input market at the expense of new entrants. Further, I find evidence that products subjected to more technical measures are imported at a higher price, while firms with larger downstreamness are able to mitigate a rise in prices.

Economic fluctuations and mortality in Canada revisited

AbstractThis paper uses panel data for Canada from 1976 to 2018, across 10 provinces, to reassess the relationship between mortality rates and economic fluctuations. The key contribution of our paper lies in examining the extent to which this relationship is driven by the employment rate (extensive margin) versus average hours worked (intensive margin). We find evidence of procyclical mortality for females at the aggregate level; aggregate male mortality remains largely unaffected by economic fluctuations. Our findings also reveal temporal heterogeneity, as the extensive margin becomes the driving force for female mortality rates during the more recent period (1990 onwards). These findings remain robust when accounting for personal income and pollution. Finally, we find some support for a procyclical relationship for individuals in the working age groups, while mortality exhibits a countercyclical pattern for children (age 0 to 14) and the elderly (age 65 and above).

The impact of management practices on export margins of firms: evidence from a recent Egyptian industrial survey

PurposeThe paper aims at studying the effect of management practices on the extensive and intensive export margins of Egyptian manufacturing firms.Design/methodology/approachThe study relies on the 2020/2021 Egyptian Industrial Firm Behavior Survey (EIFBS) which comprises 2,383 manufacturing firms representing small, medium, and large sized firms located in different regions of Egypt: Urban Governorates, Lower Egypt, and Upper Egypt. It constructs an overall management z score for each firm to estimate its effect on a firm’s probability of exporting and value of exports using Ordinary Least Squares (OLS) regressions.FindingsResults indicate that good management is associated with a higher probability of firm exporting as well as higher export revenues conditional on exporting, robust to controlling for the level of domestic sales. These effects do not differ by firm ownership or type of sector, but rather by firm size, with managerial competence raising the probability of exporting more for large-sized firms. Additionally, good management is associated with higher firm productivity, innovation and worker training propensities which gives evidence that it is both an efficiency and a quality enhancer. Moreover, monitoring and targeting practices have significant positive effects on both margins, while incentives are only significant for the extensive margin.Practical implicationsFirms that aim at enhancing their export prospects and revenues should devote resources to review and upgrade their management systems to boost their product quality and production efficiency. Policy-wise, the government should create a competitive market environment that is open to both domestic and foreign firms’ entry to stimulate the adoption of better management practices.Originality/valueThe paper is the first to explore the link between firm management practices and export outcomes for a MENA country (Egypt). It makes use of a recent survey, the 2020/2021 Egyptian Industrial Firm Behavior Survey (EIFBS). The findings shed light on the importance of different management components (monitoring, targeting and incentives) in driving a manufacturing firm’s export performance.

Financial incentives and private health insurance demand on the extensive and intensive margins

In countries with dual public and private healthcare systems, individuals are often incentivized to purchase private health insurance through subsidies and penalty. We use administrative data from Australia to study how high-income earners respond on both the intensive and extensive margins to the simultaneous withdrawal of a premium subsidy, and the increase of a tax penalty. We estimate regression discontinuity models by exploiting discontinuous changes in the penalty and subsidy rates. Our setting is particularly interesting because means testing creates different incentives at the extensive and intensive margins. Specifically, we could expect to see higher take-up of insurance coupled with downgrading to less expensive plans. We find evidence that the penalty – despite being large in value – only has a modest effect on take-up. Our results show little evidence of downgrading, which is consistent with a low price elasticity for the high-income earners we study.

Import competition, state‐owned enterprise prevalence and employment: Evidence from China

AbstractDoes state‐owned enterprise (SOE) prevalence affect the employment adjustments of firms after trade liberalisation? This paper estimates the role of the prevalence of SOEs in the labour market in import competition by using city‐industry level panel data in China from 2000 to 2006. Our results indicate that import competition decreases employment in the manufacturing industry and that SOE prevalence could partially offset the negative effect on employment. This offsetting effect is demonstrated at both extensive and intensive margins. Moreover, SOE prevalence has a positive externality for the employment of non‐SOEs under the import competition shock. Therefore, we verify the positive externality of SOEs in labour market adjustment in response to import competition.

Risk aversion, impatience, and adoption of conservation agriculture practices among smallholders in Zambia

Sustainable agricultural practices such as conservation agriculture have been promoted in southern Africa for nearly three decades, but their adoption remains low. It is of policy interest to unpack behavioural drivers of adoption to understand why adoption remains lower than anticipated. This paper assesses the effects of risk aversion and impatience on the extent and intensity of the adoption of conservation agriculture using panel data collected from 646 households in 2021 and 2022 in Zambia. We find that 12% and 18% of the smallholders were impatient and risk averse, respectively. There are two main empirical findings based on panel data Probit and Tobit models. First, on the extensive margin, being impatient is correlated with a decreased likelihood of adopting combined minimum-tillage (MT) and rotation by 2.9 percentage points and being risk averse is associated with a decreased propensity of adopting combined minimum tillage (MT) and mulching by 3.2 percentage points. Being risk averse is correlated with a decreased chance of adopting basins by 2.8 percentage points. Second, on the intensive margin, impatience and risk aversion are significantly correlated with reduced adoption intensity of basins, ripping, minimum tillage (MT), and combined MT and rotation by 0.02–0.22 ha. These findings imply a need to embed risk management (e.g., through crop yield insurance) in the scaling of sustainable agricultural practices to incentivise adoption. This can help to nudge initial adoption and to protect farmers from yield penalties that are common in experimentation stages.

Sourcing Inputs from China for Central and Eastern European Countries' Exports

Abstract: This article highlights the role of sourcing inputs from China for Central and Eastern European (CEE) countries' exports and sheds light on the rising trade deficit between China and the se countries. Research findings on gross and value-added trade panel data for 12 CEE countries suggest that a 10 per cent increase of imported capital inputs from China would cause an overall increase of 2.4 per cent in CEE exports. The effect is more pronounced for both intermediates and capital inputs imported from China, taking domestic value-added exports into consideration. By taking into account the possible endogeneity in baseline regression and the COVID-19 pandemic as an instrument of supply shock for imports from China, findings affirm that sourcing from China has promoted significantly CEE countries' gross exports as well as domestic value-added in exports. Moreover, the export boosting effect affects significantly the intensive margin. This article has rich policy implications for CEE countries to improve trade deficits with China.

Salmon trade duration: The application of firm‐level trade transaction data from the Norwegian salmon industry

AbstractSeafood products are mainly provided through trade to international markets and Norway is the major international player for the export of salmon products. It is argued that fresh or chilled salmon, which are perishable products and Norway's main seafood export, need stable trade partners to safely and properly reach consumption markets. In this study, the firm‐to‐firm level trade transactional data for both exporters and importers for the 2005–2018 period was utilized for a trade duration analysis. The Kaplan–Meier survival estimators, Cox proportional hazard model, and frailty model were used to study the stability of trade relations between the partners through survival and hazard models. The study considers the heterogeneous firm trade model along with a theoretical framework. The results show that, on average, the trade duration for the salmon trade between firms is 2.39 years, which is relatively low for a perishable product such as salmon. It shows that the market entry and exit is relatively fast, and that the survival rate between the EU as a major demand market and non‐EU countries is not very different. However, core and periphery markets can be defined by considering the survival rate, as major processing hubs in the EU, such as Poland and France as core markets, have higher survival rates compared with other countries that can be considered peripheries. Both extensive and intensive margins were found to reduce the hazard ratio. Different hazard ratios were also found between different types of exporter or ones utilizing different means of transport. We conclude that the trade duration between the partners can be increased if the competition in the market increases, which is probably possible in markets like the United States where other exporters such as Chile are available.

Business risk management programs and the adoption of beneficial management practices in Canadian crop agriculture

AbstractCanada's agricultural business risk management (BRM) programs require significant public expenditure, with unclear consequences related to climate change adaptation and mitigation through the adoption of beneficial management practices (BMPs). This study examines the relationship between Canada's current suite of BRM programs and the adoption of practices that mitigate GHG emissions in crop agriculture. We review the impacts of agricultural insurance on climate adaptation and mitigation, identifying impacts on both the intensive and extensive margins of production. We consider five potential program modifications, including: (1) changes in producer insurance premiums in AgriInsurance for the adoption of practices that would decrease the actuarially fair insurance rate if they were properly incorporated in the calculation; (2) dedicated insurance products related to trials of specific BMPs; (3) adjustments to current programs to allow more whole‐farm considerations and intercropping; (4) cross‐compliance measures on AgriInvest tied to environmental education; and (5) reduced insurance coverage for unfavorable environmental practices. While the effects of these potential modifications remain uncertain, they will drive the data collection process necessary to ensure that Canada's BRM programs play an appropriate role in greenhouse‐gas reducing BMP adoption and climate change adaptation and mitigation.

The effects of sanctions on Russian banks in TARGET2 transactions data

This paper examines the effect of financial sanctions at the most disaggregated level possible, individual bank accounts. Using data from the Eurosystem's real-time gross settlement system TARGET2, we provide empirical evidence that sanctions imposed by the European Union on Russian banks following Russia's aggression against Ukraine in 2014 and 2022 have sizably reduced financial transactions with sanctioned Russian bank accounts, both along the extensive and intensive margins. Among the various sanction measures taken, exclusion from SWIFT, a global provider of secure financial messaging services, turns out to have the largest effects.

Impact of China’s National Sword Policy on Waste Import Margins: A Difference-in-Differences Approach

As a major destination of waste products, China implemented the National Sword Policy (NSP) to regulate the high pollution of waste imports. The existing literature primarily focuses on the motivations behind China’s waste imports and the policy implications of the NSP on China’s waste imports and the global recycling market. This study innovatively focuses on the extensive, intensive, price, and quantity marginal effects of the NSP on China’s waste imports using a difference-in-differences (DID) approach with 26 categories of waste products for 150 countries and regions from 2007 to 2021. The findings indicate that: (1) The NSP has led to declines in the intensive and quantity margins of regulated waste imports, while the price margin has increased. (2) In the years following the implementation of the NSP, the impacts continued to intensify. (3) The NSP has reduced the motivation for exporters to export highly polluting waste to China in search of a “Pollution Haven”. (4) Orientations implementing policies that place the responsibility for products’ environmental impact and encourage waste sorting can effectively alleviate the inhibitory effects of the NSP. These results suggest that the Chinese government needs to strengthen the control of high-polluting and low-value product imports. Waste-exporting countries should encourage enterprises to take responsibility for the entire lifecycle of products and promote waste sorting and treatment facilities. Enterprises should strengthen the environmental impact assessment of the entire product lifecycle and consider materials that are easy to sort and recycle.

Exchange rates, invoicing currencies and the margins of exports

We examine effects of currency depreciation on South Korean exporting firms, taking into account invoicing currencies in international trade. Such effects on real exports (intensive margin) and the probability of exporting (extensive margin) are decomposed into invoice-currency adjusted improved price competitiveness, increased costs of imported inputs, and increased burden of foreign-currency debts. We find strong evidence that currency depreciation affects both margins through price competitiveness, and invoice currencies play an important role in explaining such effects. However, evidence for impacts of currency depreciation via the costs of imported inputs and the burden of foreign-currency debt channel is weak.

COVID-19 containment policies, digitalization and sustainable development goals: evidence from Alibaba’s administrative data

The impact of digital platforms on the implementation of the United Nations’ (UN) Sustainable Development Goals (SDGs), especially the business sustainability of micro, small and medium-sized enterprises (MSMEs), under different containment policies during and after the COVID-19 pandemic has not yet been studied in detail. Using detailed administrative data from Alibaba Group’s online on-demand food delivery platform, we found that the digital platform contributed to the food security, wellbeing, employment and business sustainability of MSMEs both during and after the pandemic. We uncovered merchants’ heterogeneous responses to the COVID-19 pandemic during and after the implementation of different containment policies in China. On the extensive margin, the period of complete lockdown left long-term scarring on online merchants by decreasing the number of entrants, especially in the cooked food industry. In contrast, on the intensive margin, chain stores, especially those with large chain networks or multiapp stores, exhibited stronger resilience than their counterparts during and after lockdown. Thus, specialization (at the outlet level) and wider coverage (at the network level) emerged as key factors that enable business sustainability under challenging economic circumstances.

Decomposition of Extensive and Intensive Trade Margin Impacts of Chinas Agricultural OFDI

Economic theory indicates that some ambiguity in the relationship between outward foreign direct investment (OFDI)and trade. This paper estimate the impact of OFDI on the extensive and intensive agricultural import margins of at HS 6-digit commodity level over the sample period from 2012-2020 with the top ten trade partners. We find that standard gravity variables provide good explanatory power for bilateral trade on extensive margin. The empirical results show that the scale of OFDI has a positive impact on the total imports of agricultural products by diversifying product varieties rather than increasing the price of agricultural products, i.e. the impact of OFDI is concentrated exclusively on the extensive margin of China agricultural imports rather than intensive margin. Importantly, based on specific categories of agricultural products, our results suggest that OFDI almost works on food processing and animal products. Additionally, in order to further investigate the motivation of China`s agricultural OFDI, we construct expanded gravity model. The empirical results show that agricultural-related OFDI exhibits characteristics of seeking labor-intensive factors. Overall, our results support that OFDI promotes the diversification of China`s agricultural imports and contributes to the improvement of the welfare of Chinese residents.

Free trade agreements (FTAs) and export structures: evidence from Thailand

This study aims to investigate the role of (in-effect) FTAs in influencing export structures, defined as intensive margin, extensive margin (products and markets) and sophistication at product level using Thailand’s FTA-partner countries as a case study during 2006-2020. The results show that FTAs tended to generate favorable impacts in enhancing export structures in Thailand, except the extensive margin in terms of new products. The preferential treatments noticeably expanded (existing) export products of Thailand into the FTA-partner countries (the extensive margin in terms of markets) and helped maintain traditional products exporting into these countries. Impacts of FTAs in improving the intensive and extensive margins were pronounced in Middle-income partners and in manufacturing products. ASEAN and China were export destinations where FTAs driven the intensive and extensive margins (markets) played a noticeable role. Importance of AFTA and ASEAN-China FTA was also observed when export sophistication is concerned. Imports through FTAs only helped enhance export sophistication.

Impact of eliminating retirement earnings test on labor supply and pension benefit claims.

This study explores the hypothetical elimination of Japan's retirement earnings test (ET) for public pensions, focusing on its implications for older workers' labor supply and pension-claiming behaviors. The ET currently reduces public pension benefits for individuals aged 65 and older if their earnings exceed specified thresholds, potentially discouraging employment in this demographic. Notably, the Japanese ET influences both immediate and future pension benefits, thus diminishing current payouts for working pensioners and foregoing beneficial actuarial adjustments-adjustments based on actuarial calculations that would otherwise increase future benefits to account for delayed pension claims. This dual impact may discourage the labor supply and influence pension-claiming behavior among older workers. Through a survey-based experiment with male workers aged 40-59 years expected to face the ET upon retirement, we assess three reform scenarios as the first study in the literature: (1) eliminating future benefit reductions through actuarial adjustments, thereby enhancing the value of deferred pension claims; (2) removing immediate benefit suspensions to increase current pension payments directly; and (3) a comprehensive reform combining both approaches. Our findings reveal that eliminating reductions through actuarial adjustments increases the intensive margin (labor hours and income) and encourages delayed pension claims. Conversely, removing immediate benefit suspensions influences both the extensive margin (decision to work) and the intensive margin but leads to earlier pension claims. By highlighting the importance of differentiating between immediate and future benefit components in designing ET reforms, this study demonstrates their significant impact on labor supply and pension-claiming decisions.