Employment, Skill Structure and International Trade: Firm-level Evidence for France

Pierre Biscourp and Francis Kramarz ()
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Pierre Biscourp: Crest

No 2004-28, Working Papers from Center for Research in Economics and Statistics

Abstract: We use the French "Customs files", which provide an exhaustive account of the international tradetransactions carried out by firms across the period 1986-1992, to analyze the link between imports,exports, and the employment of manufacturing firms. Firms constantly involved in international tradethroughout the period experience higher job destruction rates, or lower job creation rates, than thosethat are not. The same firms also contribute massively to the observed decrease in the share ofproduction labor in overall employment, and to the decrease in the share of unskilled workers inproduction labor. However, the firms constantly involved in international trade through imports orexports turn out unsurprisingly to be the biggest firms. A simple analysis based on creation anddestruction rates therefore fails to disentangle the size and international trade effects.An analysis of variance of the link between changes in flows of international trade and changes in ourmeasures of firm employment, conditional on size as well as industry affiliation, shows that increasingimports are associated to decreasing employment. In particular, imports of so-called "finished goods",capturing the outsourcing abroad of part of the firm’s local production activities, have the strongestrelationship with the decrease in total employment, as well as (unskilled) production employment. Onthe other hand, exports tend to be associated with job creation, although this result depends on thenature of the exported product. Controlling for firm technological innovation throughout the perioddoes not alter the conclusions obtained on international trade.

Date: 2004
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Journal Article: Employment, skill structure and international trade: Firm-level evidence for France (2007)
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