Institut d’etudes´ politiques de Paris E´ COLE DOCTORALE DE SCIENCES PO Programme doctoral en Economie Departement´ d’Economie Doctorat en Sciences economiques´ Essays in International Trade and Industrial Organization Ludovic Panon Thesis supervised by: Thomas Chaney, Professeur des Universites,´ Sciences Po Defended on June 25, 2020 Jury Mr Thomas Chaney, Professeur des universites,´ Sciences Po Mrs Paola Conconi, Professor of Economics, Universite´ libre de Bruxelles (reviewer) Mr Thierry Mayer, Professeur des universites,´ Sciences Po Mr Marc Melitz, Professor of Economics, Harvard University (reviewer) Note to the Reader The three chapters of this dissertation are self-contained research articles and can be read separately. They are preceded by an introduction (Chapter 1) which summarizes the research presented in this dissertation. The terms “paper” or “article” are used to refer to chapters. Chapters 3 and 4 are co-authored, which explains the use of the “we” pronoun. Chapters 2, 3 and 4 are referred to as the “first”, “second” and “third” chapter, respectively. Part of this work (Chapters 2 and 3) is supported by a public grant overseen by the French National Research Agency (ANR) as part of the “Investissements d’avenir” program (reference : ANR-10-EQPX-17 – Centre d’acces` securis´ e´ aux donnees´ - CASD) iii Abstract This dissertation is a collection of three essays in the fields of international trade and industrial organization. The first two chapters study the macroeconomic implications of firm heterogeneity. In the first chapter, I use data on the universe of French manufac- turing exporters from 1994-2001 to study the relationship between international trade and the manufacturing labor share. In particular, I investigate how and to what extent changes in demand conditions on foreign markets impact the labor share. This chapter aims to shed light on whether international trade may affect the labor share through channels other than changes in import exposure. In the second chapter, which is joint work with Flavien Moreau, we study the cost of distortions to competition on aggregate productivity. To do so, we have assembled a database on the identity of colluding firms that have been fined by the French competition regulator. We document novel stylized facts on cartels and anticompetitive firms. We use a static macroeconomic model to study the economic cost of cartels and help answer the following questions: is it large? If so, why does it differ from what Arnold Harberger obtained in his 1954 paper? Finally, the last chapter co-authored with Florin Cucu studies the link between asylum policies and foreign policy concerns using panel data on asylum applications in the European Union from 1999 to 2017. We then study what this relationship implies for international trade flows in a gravity regression framework. v Acknowledgments I am extremely grateful to many people who supported me throughout this (challeng- ing) academic and personal endeavor. First and foremost, I want to thank my advisor Thomas Chaney. Thomas’ infinite support and creative approach to research have inspired me throughout these past four years, and throughout the trickiest times any PhD student goes through, especially on the Job Market. He has given me the freedom to explore my own research ideas while always nudging me in the right direction. Thomas’ curiosity and passion for Economics are extremely contagious and I consider myself really lucky to have been advised by him. I am also extremely grateful for Thierry Mayer’s support. His advice helped me tremendously throughout the PhD and Job Market. Thierry’s own research has been a great source of inspiration. Importantly, our discussions encouraged me not only to delve into the macroeconomic implications of firm heterogeneity but also to develop my interest in issues related to competition. I want to thank the other two members of my thesis committee, Paola Conconi and Marc Melitz, for accepting to go through my dissertation. Their research agenda is fascinating and I truly look forward to presenting my work. I know their questions and comments will help improve it and will spill over into my future research! Finally, I want to thank my co-authors Florin Cucu and Flavien Moreau. This journey would not have been as enjoyable as it was without you and I am fortunate enough to work alongside friends. I cannot wait to see what the future holds and I hope we will keep collaborating on other projects. The PhD is a challenging yet stimulating experience. I learned a lot by interacting with the Sciences Po faculty and being challenged by them during seminars. They have helped me grow as a young economist and I am really thankful for that. In particular, I would like to thank Philippe Martin for his help on the Job Market, Johannes Boehm, vii ACKNOWLEDGMENTS Zsofia´ Bar´ any,´ Pierre Cahuc, Jeanne Commault, Golvine de Rochambeau, Michele Fioretti, Sergei Guriev, Florian Oswald and Jean-Marc Robin. I also want to thank Emeric Henry for the constant help and support he provided throughout the years and since I applied to the PhD program. Nicolas Coeurdacier and Roberto Galbiati pushed me on the Job Market and I owe you! Last but certainly not least, I learned a lot from Guy Laroque and I was glad to co-organize the Sciences Po Reading Group during my second year. I also want to say a huge thank you to Pilar Calvo, Claudine Lamaze and Sandrine Le Goff. They provided tremendous help at key stages of my research and their constant cheerfulness has been and will always be much appreciated. During my PhD, I also had the opportunity to visit Banque de France during the 2019 Spring semester. This gave me an opportunity to develop my research in a really stimulating working environment. Special thanks to Antoine Berthou who took me under his wings by giving me very helpful advice and guiding me when I was on the Job Market. I also want to thank Clement´ Mazet, Clemence´ Berson, Jocelyn Boussard (our discussions on markups were enlightening), Christophe Cahn, Barbara Castillo Rico, Antoine Devulder, Edouard Jousselin, Lisa Kerdelhue,´ Matthieu Lequien, Noemie¨ Lisack, Jacques Mairesse and Sandra Nevoux. A big thank you to Antonin Bergeaud for making helpful comments on the first and second chapters, and allowing me to present at College` de France. I also want to thank Philippe Aghion for his encouragement before going on the Job Market. I also spent a couple of months at the National University of Singapore. The idea of the first chapter blossomed in the Singaporean humidity. I am particularly indebted to Davin Chor, who was my sponsor there. Davin provided very helpful feedback at early stages of the first and third chapters. The PhD, in addition to being an incredibly stimulating adventure, can also be a wonderful human experience. This is because of all the fantastic colleagues and, I am proud to say, friends I have made over the past four years. It would take me too long to describe what each and everyone one of you brought me academically and personally. Special thanks to “Sir” Nicolo` Dalvit, Oliver Cassagneau-Francis, the truthful Sophie Cetre, Edoardo “El Comandante” Ciscato, Pierre Cotterlaz, Florin Cucu, Pierre “The Mentor” Deschamps, Etienne Fize, Arthur “The Erudite” Guillouzouic, Jean-Louis Keene, the playful Charles Louis-Sidois, Mario “Il Pippo” Luca, Julia Mink, the thought- provoking Elisa Mougin, Julien “El Cansado” Pascal, Aseem “Mr. Technology” Patel, Jan Sonntag, Camille Urvoy and Max Viskanic. I also want to thank Clement,´ Riccardo, Pauline, J-B, Lucas, Edgard, Jeanne, Jerome, Vladimir, Victor, Daniel, Stefan, Pierre V, viii ACKNOWLEDGMENTS Paul V for making the “combles” a much livelier place. Also, the Job Market was a fun experience thanks to all the members of our “Suicide Squad”: Charles, Florin, Quentin, Vladimir and Julien. I also want to thank my other friends who kept me grounded and listened to my (at times) nonsensical whining, while always providing reassuring guidance: Christophe “Man”, Edouard, Gabos, Gaby, Hugo, Tris, Adam, Paul, Martin, Sophie, Alexandra, the crew (Andy, Felix, John, Lucrezia). I want to thank my family and my siblings, and especially my parents. Their unlimited help has been paramount and writing this dissertation would not have been possible without their unwavering support and love. Finally, a thank you in italics cannot convey how critical the support of Cec´ılia has been. I am sincerely grateful and lucky for having her in my life. ix Contents 1 Introduction1 2 Labor Share, Foreign Demand and Superstar Exporters 12 2.1 Introduction.................................... 13 2.2 Data and Stylized Facts.............................. 18 2.2.1 Data Sources and Sample........................ 18 2.2.2 Stylized Facts............................... 19 2.3 Empirical Framework............................... 25 2.3.1 Econometric Specifications........................ 25 2.3.2 Identification Strategy.......................... 27 2.4 Results....................................... 30 2.4.1 Foreign Demand Growth and Reallocation.............. 30 2.4.2 Foreign Demand Growth and Labor Shares.............. 32 2.4.3 Robustness Tests............................. 35 2.4.4 Magnitude................................. 39 2.5 Theory....................................... 43 2.5.1 Closed Economy Model......................... 43 2.6 Conclusion..................................... 51 xi CONTENTS 2.A Data Appendix.................................. 58 2.A.1 Sample Selection............................