Exporting and Labor Demand: Micro-Level Evidence from Germany

Andreas Lichter (), Andreas Peichl and Sebastian Siegloch
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Andreas Lichter: Technical University Dortmund

No 7494, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: It is widely believed that globalization increases the volatility of employment and decreases the bargaining power of workers. One mechanism explaining this relationship is given by the long-standing Hicks-Marshall laws of derived demand: with international trade increasing competition and therefore the price elasticity of product demand, exporters are predicted to have higher labor demand elasticities. Our paper is the first to test this relationship empirically by analyzing the effects of exporting on firms' labor demand. Using rich, administrative linked employer-employee panel data from Germany, we explicitly control for issues of self-selection and endogeneity in the firms' decisions to export by providing fixed effects and instrumental variable estimates. Our results show that exporting indeed has a positive and significant effect on the own-wage elasticity of unconditional labor demand, due to higher price elasticities of product demand.

Keywords: export; labor demand; wage elasticity; microdata; trade; Germany (search for similar items in EconPapers)
JEL-codes: F16 F66 J23 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2013-07
New Economics Papers: this item is included in nep-eur, nep-int, nep-lab, nep-lma and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published - revised version published in: Canadian Journal of Economics, 2017, 50 (4), 1161-1189

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Related works:
Journal Article: Exporting and labour demand: Micro-level evidence from Germany (2017)
Journal Article: Exporting and labour demand: Micro‐level evidence from Germany (2017)
Working Paper: Exporting and Labor Demand: Micro-level Evidence from Germany (2014)
Working Paper: Exporting and labor demand: Micro-level evidence from Germany (2014)
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