TY - THES T1 - Essays on Multinational Production and the Propagation of Shocks T2 - Department of Economics Y1 - 2015 A1 - Flaaen, Aaron KW - Business Cycle Comovement KW - Global Supply Chains KW - Multinational Firms AB - The increased exposure of the United States to economic shocks originating from abroad is a common concern of those critical of globalization. An understanding of the cross-country transmission of shocks is of central importance for policymakers seeking to limit excess volatility resulting from international linkages. Firms whose ownership spans multiple countries are one under-appreciated mechanism. These multinationals represent an enormous share of the global economy, but a general scarcity of firm-level data has limited our understanding of how they affect both origin and destination countries. One contribution of this dissertation is to expand the data availability on these firms, using innovative data-linking techniques. The first chapter provides some of the first ever causal evidence on the role of trade and multinational production in the transmission of economic shocks and the cross-country synchronization of business cycles. This chapter leverages the 2011 Japanese earthquake/tsunami as a natural experiment. It finds that those U.S. firms with large exposure to intermediate inputs from Japan -- typically the affiliates of Japanese multinationals -- experience significant output declines after this shock, roughly one-for-one with declines in imported inputs. Structural estimation of the production function reveals substantial complementarities between imported and domestic inputs. These results suggest that global supply chains are more rigid than previously thought. The second chapter incorporates this low production elasticity of imported inputs into an otherwise standard dynamic stochastic general equilibrium model. The low degree of input substitutability, when applied to the share of trade governed by multinational firms, can generate effects in the aggregate. Value-added co-movement increases by 11 percentage points in the baseline model relative to a model where such features are absent. The model confirms that real linkages -- in addition to financial and policy spillovers -- play an important role in business cycle synchronization. The third chapter describes additional characteristics of multinational firms relative to domestic and exporting firms in the U.S. economy. These firms are larger, more productive, more capital intensive, and pay higher wages than other firms. The relative patterns of trade and output offer valuable guidance for the motives for ownership that spans national boundaries. JF - Department of Economics PB - University of Michigan CY - Ann Arbor, MI UR - http://hdl.handle.net/2027.42/111331 ER - TY - JOUR T1 - Record Linkage using STATA: Pre-processing, Linking and Reviewing Utilities JF - The Stata Journal Y1 - 2015 A1 - Wasi, Nada A1 - Flaaen, Aaron AB - In this article, we describe Stata utilities that facilitate probabilistic record linkage—the technique typically used for merging two datasets with no common record identifier. While the preprocessing tools are developed specifically for linking two company databases, the other tools can be used for many different types of linkage. Specifically, the stnd_compname and stnd_address commands parse and standardize company names and addresses to improve the match quality when linking. The reclink2 command is a generalized version of Blasnik's reclink (2010, Statistical Software Components S456876, Department of Economics, Boston College) that allows for many-to-one matching. Finally, clrevmatch is an interactive tool that allows the user to review matched results in an efficient and seamless manner. Rather than exporting results to another file format (for example, Excel), inputting clerical reviews, and importing back into Stata, one can use the clrevmatch tool to conduct all of these steps within Stata. This helps improve the speed and flexibility of matching, which often involves multiple runs. VL - 15 UR - http://www.stata-journal.com/article.html?article=dm0082 IS - 3 ER - TY - RPRT T1 - Reconsidering the Consequences of Worker Displacements: Survey versus Administrative Measurements Y1 - 2013 A1 - Flaaen, Aaron A1 - Shapiro, Matthew A1 - Isaac Sorkin AB - Displaced workers suffer persistent earnings losses. This stark finding has been established by following workers in administrative data after mass layoffs under the presumption that these are involuntary job losses owing to economic distress. Using linked survey and administrative data, this paper examines this presumption by matching worker-supplied reasons for separations with what is happening at the firm. The paper documents substantially different earnings dynamics in mass layoffs depending on the reason the worker gives for the separation. Using a new methodology for accounting for the increase in the probability of separation among all types of survey response during in a mass layoff, the paper finds earnings loss estimates that are surprisingly close to those using only administrative data. Finally, the survey-administrative link allows the decomposition of earnings losses due to subsequent nonemployment into non-participation and unemployment. Including the zero earnings of those identified as being unemployed substantially increases the estimate of earnings losses. PB - University of Michigan UR - http://www-personal.umich.edu/~shapiro/papers/ReconsideringDisplacements.pdf ER -