Diana Van Patten - Ph.D Candidate, UCLA Economics

I am a PhD candidate in Economics at UCLA. I will be on the job market in 2019-2020 and available for interviews at the EEA Meetings in Rotterdam and the ASSA Meetings in San Diego.

Research interests: Macroeconomics, Economic Development, Trade.

Job Market Paper

“Multinationals, Monopsony and Local Development: Evidence from the United Fruit Company”

with Esteban Méndez-Chacón

This paper studies the short- and long-run effects of large firms on economic development. We use evidence from one of the largest multinationals of the 20th Century: The United Fruit Company (UFCo). The firm was given a large land concession in Costa Rica—one of the so-called "Banana Republics"—from 1889 to 1984. Using administrative census data with census-block geo-references from 1973 to 2011, we implement a geographic regression discontinuity (RD) design that exploits a quasi-random assignment of land. We find that the firm had a positive and persistent effect on living standards. Regions within the UFCo were 26% less likely to be poor in 1973 than nearby counterfactual locations, with only 63% of the gap closing over the following 3 decades. Company documents explain that a key concern at the time was to attract and maintain a sizable workforce, which induced the firm to invest heavily in local amenities that likely account for our result. We then build a dynamic spatial model in which a firm's labor market power within a region depends on how mobile workers are across locations and run counterfactual exercises. The model is consistent with observable spatial frictions and the RD estimates, and shows that the firm increases aggregate welfare by 2.9%. This effect is increasing in worker mobility: If workers were half as mobile, the firm would have decreased aggregate welfare by 6%. The model also shows that a local monopsonist compensates workers mostly through local amenities keeping wages low, and leads to higher welfare levels than a counterfactual with perfectly competitive labor markets in all regions if we allow for amenities to positively affect productivity.

Media coverage: Marginal Revolution, Frankfurter Allgemeine.

Working Papers

“International Diffusion of Technology: Accounting for Differences in Learning Abilities”

New draft coming soon!

An important question in the field of economic growth and development is how developing countries learn to adopt and use new technologies. This paper studies how countries learn from each other through international trade. First, I document how productivity grows systematically faster for countries that trade with partners with better technologies, but that this is reducing the gap between local and foreign productivity. Second, I build a model in which knowledge transfers can occur through imported technology, and in which agents have heterogeneous learning abilities: The probability of a producer adopting a technology slightly better than hers is larger than the probability of adopting a much more sophisticated one—the trade-off being that conditional on adoption, more sophisticated technologies lead to higher productivity. I document how the model matches the empirical dependence of productivity growth on productivity gaps across trading partners, and the firm size distribution. The model also highlights how ignoring differences in learning abilities can overestimate the impact of exposure to high-TFP trading partners, leading to suboptimal trade policies.

The Bretton Woods international financial system, which was in place from roughly 1949 to 1973, is the most significant modern policy experiment to attempt to simultaneously manage international payments, international capital flows, and international currency values. This paper uses an international macroeconomic accounting methodology to study the Bretton Woods system and finds that it: (i) significantly distorted both international and domestic capital markets and hence the accumulation and allocation of capital; (ii) significantly slowed the reconstruction of Europe, albeit while limiting the indebtedness of European countries. Our results also provide support for the utility of the accounting methodology in that it finds a sharp change in the behavior of domestic and international capital market wedges that coincides with the breakdown of the system.

“Bretton Woods and the Reconstruction of Europe”

with Lee Ohanian, Paulina Restrepo-Echavarría, and Mark Wright

This paper studies the effects of changing current trade barriers between Bangladesh and India on national welfare, and on the distribution of people and Real GDP in regions within these countries. We use a spatial general equilibrium model calibrated to these two economies, along with road network travel-time calculated using GPS data, to measure changes in economic outcomes given changes in trade costs across regions. In particular, we focus on three scenarios: (i) allowing traffic of vehicles transporting goods along the routes specified in the BBIN motor vehicle agreement (MVA); (ii) changes in traffic and trade of vehicles transporting goods along the routes specified in the MVA; and (iii) complete integration allowing traffic and trade of vehicles transporting goods across any route. Our counterfactual exercises show that decreasing trade barriers between these two countries can lead to up to a 1.4 and 1.1 percent increase in national welfare for India and Bangladesh, respectively.

“Bridging India and Bangladesh: Cross-border Trade and Motor Vehicle Agreements”