Exchange Rate, Employment and Hours: What Firm-Level Data Say

Francesco Nucci and Alberto Pozzolo

No 12, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences

Abstract: Using a representative panel of manufacturing firms, we estimate the response of job and hours worked to currency swings, showing that it depends primarily on the firm's exposure to foreign sales and its reliance on imported inputs. Further, we show that, for given international;orientation, the response to exchange rate ;fluctuations is magnified when firms exhibit a lower monopoly power and when they face foreign pressure in the domestic market through import penetration. The degree of substitutability between imported and other inputs and the distribution of workers by type introduce additional degrees of specilcity in the employment sensitivity;to exchange rate swings. Further, wage adjustments are also shown to provide a channel through which firms react to currency shocks. Finally, gross job ;ows within the firm are found to depend;on exchange rate fluctuations, although the effect on job creation is predominant.

Keywords: Employment; Exchange rate; Firm's foreign exposure (search for similar items in EconPapers)
JEL-codes: E24 F16 F31 (search for similar items in EconPapers)
Pages: 39
Date: 2009-01
New Economics Papers: this item is included in nep-bec, nep-lab and nep-opm
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http://docs.dises.univpm.it/web/quaderni/pdfmofir/Mofir012.pdf First version, 2009 (application/pdf)

Related works:
Journal Article: The exchange rate, employment and hours: What firm-level data say (2010)
Working Paper: Exchange Rate, Employment and Hours: What Firm-Level Data Say (2008)
Working Paper: The Exchange Rate, Employment and Hours: What Firm-Level Data Say
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Persistent link: https://EconPapers.repec.org/RePEc:anc:wmofir:12

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