Heterogeneous Impacts of Trade Shocks on Workers

Patrick Arni (), Peter Egger, Katharina Erhardt (), Matthias Gubler and Philip Sauré
Additional contact information
Patrick Arni: University of Bristol
Katharina Erhardt: Heinrich Heine University Düsseldorf

No 16895, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper identifies the causal effects of trade shocks on worker outcomes. We exploit a unique setting based on three pillars: (i) a large, unanticipated appreciation of the Swiss franc in 2015, (ii) detailed data with firm-level exposure to trade via output markets (both domestic and foreign) and imported inputs (distinguished by their foreign labor content), which we match to (iii) worker-level panel data with rich information on labor-market outcomes. We find that increased competition in output markets induces negative effects on earnings for workers of affected firms. Conversely, a price drop of foreign inputs generates positive effects for workers of importing firms, but less so the higher the labor content of these imported inputs. All these patterns are consistent with a parsimonious model of task-based production. Moreover, positive and negative earnings effects are especially strong for workers in the lower tail of the within-firm wage distribution and, in particular, for workers who change their employer, pointing at involuntary (voluntary) job separations from firms that are negatively (positively) affected by the exchange rate appreciation.

Keywords: trade and labor; exchange rate shock; matched employer-employee data (search for similar items in EconPapers)
JEL-codes: F14 F16 J46 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2024-03
New Economics Papers: this item is included in nep-int and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Heterogeneous Impacts of Trade Shocks on Workers (2024)
Working Paper: Heterogeneous Impacts of Trade Shocks on Workers (2024)
Working Paper: Heterogeneous Impacts of Trade Shocks on Workers (2024)
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