Department of Applied Economics
3000, chemin de la Cote-Sainte-Catherine
Institutional Affiliations: HEC Montreal and Joint Program on the Science and Policy of Global Change, Massachusetts Institut
NBER Working Papers and Publications
|August 2018||Per Capita Income, Consumption Patterns, and CO2 Emissions|
with Thibault Fally: w24923
This paper investigates the role of income-driven differences in consumption patterns in explaining and projecting energy demand and CO2 emissions. We develop and estimate a general-equilibrium model with non-homothetic preferences across a large set of countries and sectors, and trace embodied energy consumption through intermediate use and trade linkages. Consumption of energy goods is less than proportional to income in rich countries, and more income-elastic in low-income countries. While income effects are weaker for embodied energy, we find a significant negative relationship between income elasticity and CO2 intensity across all goods. These income-driven differences in consumption choices can partially explain the observed inverted-U relationship...
|June 2017||Per Capita Income and the Demand for Skills|
with Thibault Fally, James Markusen: w23482
Almost all of the literature about the growth of income inequality and the relationship between skilled and unskilled wages approaches the issue from the production side of general equilibrium (skill-biased technical change, international trade). Here, we add a role for income-dependent demand interacted with factor intensities in production. We explore how income growth and trade liberalization influence the demand for skilled labor when preferences are non-homothetic and income-elastic goods are more intensive in skilled labor, an empirical regularity documented in Caron, Fally and Markusen (2014). In one experiment, counterfactual simulations show that sector neutral productivity growth, which generates shifts in consumption towards skill-intensive goods, leads to significant increases ...
|June 2012||Skill Premium and Trade Puzzles: a Solution Linking Production and Preferences|
with Thibault Fally, James R. Markusen: w18131
International trade theory is a general-equilibrium discipline, yet most of the standard portfolio of research focuses on the production side of general equilibrium. In addition, we do not have a good understanding of the relationship between characteristics of goods in production and characteristics of preferences. This paper conducts an empirical investigation into the relationship between a good's factor intensity in production and its income elasticity of demand in consumption. In particular, we find a strong and significant positive relationship between skilled-labor intensity in production and income elasticity of demand for several types of preferences, with and without accounting for trade costs and differences in prices. Counter-factual simulations yield a number of results. We ca...
Published: "International Trade Puzzles: A Solution Linking Production and Preferences" With Justin Caron and James R. Markusen, Quarterly Journal of Economics, August 2014, Vol. 129 (3).