Facilitating the entry of foreign firms has potentially large implications for consumer welfare and labor market dynamics. Atkin et al. (2018) analyze the effects of a period of accelerated foreign supermarket entry in Mexico. Using highly detailed microdata, such as bar code–level prices and consumption quantities, store-level profits, and worker-level incomes, they are able to disentangle the various channels through which foreign entry affected household welfare in the municipalities of entry. Relying on a flexible model, the authors estimate important welfare gains for the average household of 6 percent of initial household income. While there were no effects on average municipality-level household incomes or employment, there were substantial reductions in markups and marginal costs of local firms, suggesting spillovers from foreign entry (for example, better management practices or improved logistics). Lower prices and increased product varieties benefited all households, although richer households benefit more as their elasticity of substitution across different stores is higher: the richest households substitute over 50 percent of their retail consumption to higher-quality foreign stores, while the poorest substitute less than 15 percent.

In a recent working paper, Farrokhi and Pellegrina (2022) rely on data at the 10km<sup>2</sup> level from the Food and Agriculture Organization (FAO) to calibrate a structural model that emphasizes the links between trade, crop specialization, technology choices, and agricultural productivity worldwide. Through counterfactual exercises, the authors show that reductions in trade costs from 1980 to 2007 increased food consumption by 4 percent and welfare by 2.5 percent. The drivers of these improvements are, with roughly equal importance, gains through technology adoption and crop specialization across countries, given their natural preconditions for different crops. The paper provides important evidence on the gains of reducing trade barriers, especially for economies that still rely largely on agriculture.

Besides these aggregate results, some research examines how trade openness and FDI affects labor market outcomes at the firm level. Using firm-level data, Bloom et al. (2016) exploit the increased import competition in 12 European countries following China’s entry into the World Trade Organization (WTO) in 2001 to examine the impact on local firms. Relying on instrumental variable designs, they find that import competition led to increased innovation, R&D investment, and higher management quality within surviving firms. At the same time, it reduced employment and survival probabilities in low-tech firms and triggered a reallocation of labor toward more technologically advanced firms.

In LMICs, Brambilla et al. (2017) document the prevalence of wage premia when working for exporting firms. The average premium of working for an exporting firm in their sample of 61 lowand middle-income countries is 25 percent. When controlling for the foreign versus domestic ownership status, this decreases by up to 17 percent. They identify four major drivers of the wage premia: compared to non-exporting firms, exporting ones hire more skilled workers, utilize more sophisticated machines, buy higher quality inputs, and are more productive.

Entry of large multinational firms in LMICs has, in a few historical cases, translated to these firms exerting monopsony power and dominating local labor markets. Mendez and Van Patten (2022) study the case of the monopsonistic power of the United Fruit Company (UFC) in Costa Rica between 1899 and 1984. Contrary to the assumption that foreign multinationals can hurt workers, 23