Using a Soft Deadline to Counter Monopoly: Theory and Experiment (Submitted)
[Abstract] A monopolist often exploits a hard deadline to raise their commitment power. I explore whether a buyer can employ a soft deadline to counter the monopoly. Using a simple durable goods monopolist model under a deadline, I show that the buyer’s imperfect commitment to an earlier exit may elicit a compromise from the monopolist and generate the buyer’s risk premium. The soft deadline partially restores the Coasian dynamics previously canceled out by the hard deadline. Laboratory experiments provide evidence for even stronger efficacy of the commitment, plausibly by inciting the fairness of the monopolists.
[Abstract] The aging economies facing secular labor shortage are bound to respond by admitting foreign labor or by adopting labor-saving technology. This paper proposes that inflows of regional foreign labor guides the adoption of automation. I develop a task-based framework, in which tasks are optimally allocated across robots, and domestic or foreign labor. Then, I semi-parametrically recover cross-factor substitution schedules from a series of commuting zone-level immigration elasticities on economic outcomes, which are estimated using a 1940 ethnic settlement pattern. The dynamic model predicts that immigration's impact on wages between 1980 and 2015 could be reversed by including effects from immigration-induced adjustments of automation. I find that low-skilled immigration alone reduces routine occupation native wage, but raises wages in the long run by retarding the adoption of automation, resulting in enhanced domestic welfare. Finally, I find that a universal basic income policy targeted to U.S. citizens will boost dependence on automation and foreign labor by upshifting routine occupation native wages.
Does Immigration Impede Offshoring?:
Evidence from the U.K. Labor Markets (with Yajie Wang)
[Abstract] As globalization proceeds, workers from developing countries rush to developed economies for higher wages, while firms move out to developing countries for lower wages. This paper explore how immigration inflow affects offshoring of firms. Using the industrial level datasets in U.K. and instrumental variable strategy on the historical settlement pattern of foreign residents, we find that immigration inflow shrinks offshored employments. We find that offshoring significantly reduces routine occupation wages and that immigration inflow adversely affects non-routine occupation wages, but does not harm routine occupation wages, plausibly via impeding offshoring in the long run.