Agents with independent risks (regions) often create unions and delegate re-distributive power to a central institution (center) that provides risk-sharing through costly transfers. However, there is the risk that regions free-ride on each other; this risk may be exacerbated when the center cannot commit to future policies. We study a differential game of two regions that make savings decisions and a benevolent center that sets transfers but lacks commitment. We show that this fully dynamic savings game of high complexity can be characterized and computed. One region always ends up bankrupt and the center provides a bail-out: as the poor region enters bankruptcy, there is an upward jump in transfers to the poor region that coincides with a downward jump in the poor region’s consumption. Delegation to a center is Pareto-improving provided that the center’s welfare weights reflect initial wealth differences between regions. However, once regions’ wealth and the center’s welfare weights tilt sufficiently, the dynamics turn unstable, hastening impoverishment and bail-outs.
We show that exporting reshapes the migrant-native wage gap. We develop a model with heterogeneous firms and directed search, showing that high-skilled immigrants lower fixed export costs by leveraging destination-specific knowledge. The model generates an information premium for these workers in exporting firms that can offset immigrant-specific labour-market disadvantages. Using Portuguese employer-employee data linked to customs records, we observe a closing of the migrant-native wage gap among high-skilled workers in exporting firms, so that high-skilled immigrants earn wages comparable to those of high-skilled natives. We find no such results for low-skilled workers. To test the information premium hypothesis, we exploit differences across immigrants’ origin countries and firms’ export destinations. Our results indicate that destination-specific exporting can help reduce the wage gap, especially for high-skilled occupations. We thus provide micro-level evidence that immigrants’ export-facilitating role translates into wage premia within firms.
European integration is now faced with the question of strategic autonomy. Against this backdrop, this paper has three objectives. First, it uses disaggregated trade data and established empirical methods to assess the benefits of European integration on trade among the members of the European Union (EU) as well as on trade between EU members and non-member countries, including non-members that are part of the Single Market. Second, it evaluates the costs of EU strategic autonomy — implying not trading with “riskier” partners. Third, it asks whether deeper integration within the EU can alleviate these costs. The paper shows that the gains from European integration are substantial, albeit heterogeneous across Member States, non-members, and sectors, and that the costs of strategic autonomy can be offset by deeper, but comparatively more modest, integration efforts within the European Union.
Using high-frequency administrative data from Italy, this study examines how workplace fatalities and related media and public attention affect safety outcomes. Our empirical strategy combines event-study and difference-in-differences designs with variation in newspaper circulation, article-level reporting, and exogenous shifts in public attention from unexpected football results. We find that “newsworthy” deaths — those involving young, female, or foreign-born workers — reduce non-fatal injuries, especially where media exposure and coverage are higher, but the effect weakens when attention is diverted by competing football events. These results highlight media salience, shaped by public attention, as an informal mechanism for improving workplace safety.
