Estimating the Macroeconomic Effects of Each Totalization Agreement

This paper aims to quantify the effects of each Social Security totalization agreement that the United States has established since the late 1970s. We combine the recently developed synthetic control method with event-study analyses by constructing, for each country of interest, a synthetic control country which is a weighted average of actual control countries. We use the difference between the country of interest and the synthetic control to measure the effects of each agreement on foreign direct investment, international labor mobility and bilateral trade following the agreement. We expect the results of this study to be informative of the effectiveness of each totalization agreement and to provide guidance on the choice of countries with which the U.S. should sign an agreement next to achieve the maximum gains.