Firm Responses and Wage Effects of Foreign Demand Shocks with Fixed Labor Costs and Monopsony

Emmanuel Dhyne, Ken Kikkawa, Toshiaki Komatsu, Magne Mogstad and Felix Tintelnot

No 30447, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We quantify the firm responses and real wage effects of foreign demand shocks. We use Belgian micro data to construct firm-specific measures of demand shocks which capture that firms pass on foreign demand shocks to domestic suppliers. Our estimates of firm responses to these shocks suggest that firms face upward-sloping labor supply curves and have sizable fixed labor costs. We specify a general equilibrium model with these features to quantify the aggregate effects of simulated tariff shocks on wages. We find that ignoring fixed labor costs substantially underestimates aggregate effects on wages, whereas incorporating upward-sloping labor supply appears less consequential.

JEL-codes: E1 F1 F12 J31 J42 L11 (search for similar items in EconPapers)
Date: 2022-09
New Economics Papers: this item is included in nep-dge, nep-int, nep-lma and nep-opm
Note: IFM ITI LS PR
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.nber.org/papers/w30447.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:30447

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w30447

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().