Heterogeneous Firms or Heterogeneous Workers? Implications for Exporter Premiums and the Gains from Trade

Irarrazabal, Alfonso; Moxnes, Andreas; Ulltveit‐Moe, Karen Helene

doi:10.1162/rest_a_00285

Cited by 36 publications

(35 citation statements)

References 20 publications

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“…36 To indirectly assess the extent to which the endogeneity 34 Summary statistics of our supply driven instruments reveal that they are persistent over time, i.e. most of the variation is between commuting areas and that the overtime within variation is modest.…”

Section: Endogeneitymentioning

confidence: 99%

Labor diversity and firm productivity

Parrotta¹,

Pozzoli²,

Pytlíková³

2014

European Economic Review

165

132

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Using a matched employer-employee data-set, we analyze how workforce diversity associates with the productivity of rms in Denmark, following two main econometric routes. In the rst one, we estimate a standard Cobb-Douglas function, calculate the implied total factor productivity and relate the latter to diversity statistics in a second stage. This reduced-form approach allows us to identify which types of labor heterogeneity appear to descriptively matter. In the second approach, we move toward a richer production function specication, which takes dierent types of labor as inputs and that allows for exible substitution patterns, and possible quality dierences between types. Both methods show that workforce diversity in ethnicity is negatively associated with rm productivity. The evidence regarding diversity in education is mixed.JEL Classication: J24, J61, J82, L20.

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Section: Endogeneitymentioning

confidence: 99%

Labor diversity and firm productivity

Parrotta¹,

Pozzoli²,

Pytlíková³

2014

European Economic Review

165

132

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“…9 Within-sector productivity differences across firms can be substantially explained by differences in skill intensity (that is, the different proportions of skilled worker across firms). In a recent paper that uses firmlevel data that matches employer and employee for Norwegian Manufacturing sector, the authors confirm the fact that over 67 % of the exporter productivity premium reflects differences in skill intensiveness rather than in intrinsic firm efficiency (Irarrazabal et al 2009). See also Crozet and Trionfetti (2011) for empirical evidence that factor intensities differ across firms even within the same industry.…”

Section: Productionmentioning

confidence: 80%

“…16 Recent empirical studies of international trade support the view that firm's skill intensity increases revenue through their production of higher-quality products: (i) a more skill intensive firm is more likely to be an exporter (e.g., Schank et al 2007;Bas 2012), (ii) exporters pay higher wages because the labor force employed by exporting firms are relatively biased toward skilled labor (see, e.g., Irarrazabal et al 2009), and (iii) a positive association between firm's skill intensity and product quality, and more successful firms set higher prices, which implies "quality competition" (e.g., Verhoogen 2008; Kyoji and Keiko 2010;Bastos and Silva 2010;Baldwin and Harrigan 2011;Kugler and Verhoogen 2012). Hence, as suggested in a number of empirical findings, I assume that α > φln( s w ) holds, so that a firm's revenue increases with firm-specific skilled-labor intensity θ and its resulting product quality.…”

Section: Firm Competition Entry Exit and Free Entry Conditionmentioning

confidence: 99%

“…2 See also Bernard et al (2007), Crozet and Trionfetti (2011), and Harrigan and Reshef (2011) for evidence of firm heterogeneity with respect to factor intensity. Irarrazabal et al (2009) show that the exporter wage premium is mainly caused by differences in workforce composition across firms. Similarly, Schank et al (2007) use linked employer-employed data from Germany to confirm that the wage differential between exporters and non-exporters becomes small enough when employees' observable and unobservable characteristics are controlled for.…”

Section: Introductionmentioning

confidence: 99%

“…It also shows that firms with a higher level of skill intensity (i.e., a higher ratio of skilled to unskilled labor that produces a unit of output) are more likely to export, so that the exporter wage premium occurs simply due to their employing a higher proportion of skilled labor (see, e.g., Schank et al 2007;Irarrazabal et al 2009). 2 In this context, the different composition of production resources across firms must be taken into account in order to accurately analyze a link between wage inequality and trade integration.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Skilled-Labor Intensity Differences Across Firms, Endogenous Product Quality, and Wage Inequality

Whang

2015

Open Econ Rev

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This paper proposes a theory to explain the relative wage-rate increase for skilled labor that results from trade liberalization that relies on within-sector reallocations of production resources (skilled and unskilled labor) across firms. Motivated by some stylized facts, in a model with firm heterogeneity, including firms that differ in their skill intensity even within a narrowly defined industry, firms with relatively high skill intensity that are more likely to be exporters, and a positive association between a firm's skill intensity and its product quality, I develop a general equilibrium model where firms with a higher skill intensity endogenously choose a higher-quality product, and tend to be more profitable. In this framework, a reduction in trade costs allows members of the workforce to reallocate to more efficient firms that produce higher-quality products, using their skilled labor more intensively, resulting in a rising skill premium. The main sources of the increasing wage inequality that followed trade openness are a positive link between a firm's skill intensity, its product quality, and quality competition.

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Spatial distribution of skills and regional trade integration

Candau

Dienesch

2015

Ann Reg Sci

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This study is a theoretical and empirical analysis of the effects of regional trade integration on the spatial distribution of skills. We first develop a theoretical model in the economic geography field to integrate heterogeneous workers, housing, local entrepreneurs and skill upgrading by unskilled workers. We then analyse how the domestic integration of each state in the U.S., approximated by truck registrations, influenced the location choice of skilled and unskilled workers in 1940-1960. By using inter-and intrastate trade flow from the U.S. Commodity Flow Survey, we also analyse the impact of regional trade costs for the contemporary period (1997, 2002, 2007). The theoretical model shows that the bell-shaped curve of spatial development displays a sorting of individuals and firms. Only high-skilled workers increasingly choose the core region during the process of regional integration while intermediate-skilled workers move to the periphery due to the increase in the price of housing. By impacting differently on the opportunity cost to invest in skill acquisition in the core and the periphery, this sorting influences the regional creation of human capital. First a regional divergence in education investment occurs, and then a convergence, but only for high level regional integration. The empirical analysis confirms that regional trade integration has been a determinant of the spatial distribution of skills in the United States.

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Heterogeneous Firms or Heterogeneous Workers? Implications for Exporter Premiums and the Gains from Trade

Cited by 36 publications

References 20 publications

Labor diversity and firm productivity

Labor diversity and firm productivity

Skilled-Labor Intensity Differences Across Firms, Endogenous Product Quality, and Wage Inequality

Spatial distribution of skills and regional trade integration

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