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Adjusting to globalization - Evidence from worker-establishment matches in Germany

Wolfgang Dauth, Sebastian Findeisen and Jens Suedekum ()

No 205, DICE Discussion Papers from University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: This paper addresses the impact of rising international trade exposure on individual earnings profiles in heterogeneous worker-establishment matches. We exploit rich panel data on job biographies of manufacturing workers in Germany, and apply a high-dimensional fixed effects approach to analyze endogenous mobility between plants, industries, and regions in response to trade shocks. Rising import penetration reduces earnings within job spells, and it induces workers to leave the exposed industries. Intra-industry mobility to other firms or regions are far less common adjustments. This induced industry mobility mitigates the adverse impacts of import shocks in the workers' subsequent careers, but their cumulated earnings over a longer time horizon are still negatively affected. By contrast, we find much less evidence for sorting into export-oriented industries, but the earnings gains mostly arise within job spells. These results point at an asymmetry in the individual labour market response to trade shocks: Import shocks trigger substantial "push effects", whereas the "pull effects" of export shocks are weaker.

Keywords: international trade; Individual labour market responses; work biographies; endogenous worker mobility; Germany (search for similar items in EconPapers)
JEL-codes: F16 J31 R11 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-eur and nep-int
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Working Paper: Adjusting to Globalization - Evidence from Worker-Establishment Matches in Germany (2016) Downloads
Working Paper: Adjusting to Globalization - Evidence from Worker-Establishment Matches in Germany (2016) Downloads
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