The Skill-Biased Effects of Exchange Rate Fluctuations

Boris Kaiser and Michael Siegenthaler

No 15-385, KOF Working papers from KOF Swiss Economic Institute, ETH Zurich

Abstract: This paper examines the linkages between real exchange rate movements and firms' skill demand. Real exchange rate movements may affect unskilled workers differently than skilled workers because of skill-specific adjustment costs, or because exchange rates lead to changes in relative factor prices and firms' competition intensity. Using panel data on Swiss manufacturers, we find that an appreciation increases high-skilled and reduces low-skilled employment in most firms, while total employment remains roughly unchanged. We find evidence that exchange rates influence firms' skill intensity because they affect outsourcing activities, innovation efforts, and firms' compensation schemes.

Keywords: Labor Demand; Skill Intensity; Employment; Real Exchange Rates; Firms' Foreign Exposure (search for similar items in EconPapers)
Pages: 50 pages
Date: 2015-06
New Economics Papers: this item is included in nep-lab, nep-mac and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://dx.doi.org/10.3929/ethz-a-010479940 (application/pdf)

Related works:
Journal Article: The Skill‐biased Effects of Exchange Rate Fluctuations (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:kof:wpskof:15-385

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