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

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Author Info
Francesco Nucci (Universit… di Roma "La Sapienza")
Alberto Franco Pozzolo (Universit… degli Studi del Moliste)

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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.

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File URL: http://dea2.univpm.it/quaderni/pdfmofir/Mofir012.pdf
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File Function: First version, 2009
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Publisher Info
Paper provided by Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economics in its series Mo.Fi.R. Working Papers with number 12.

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Length: 39
Date of creation: Jan 2009
Date of revision:
Handle: RePEc:anc:wmofir:12

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Web page: http://www.mofir.univpm.it/

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Related research
Keywords: Employment; Exchange rate; Firm's foreign exposure;

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Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
F31 - International Economics - - International Finance - - - Foreign Exchange

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Pierre-Olivier Gourinchas, 1998. "Exchange Rates and Jobs: What Do We Learn from Job Flows?," NBER Working Papers 6864, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. José Manuel Campa & Linda S. Goldberg, 1999. "Employment versus Wage Adjustment and the U.S. Dollar," Working Papers 99-07, New York University, Leonard N. Stern School of Business, Department of Economics. [Downloadable!]
    Other versions:
  3. Jose Campa & Linda S. Goldberg, 1995. "Investment, Pass-Through and Exchange Rates: A Cross-Country Comparison," NBER Working Papers 5139, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Michael W. Klein & Scott Schuh & Robert K. Triest, 2002. "Job creation, job destruction, and international competition: a literature review," Working Papers 02-7, Federal Reserve Bank of Boston. [Downloadable!]
  5. Michael W. Klein & Scott Schuh & Robert K. Triest, 1999. "Job creation, job destruction, and the real exchange rate," Working Papers 99-11, Federal Reserve Bank of Boston. [Downloadable!]
    Other versions:
  6. Jiawen Yang, 1992. "Exchange Rate Pass-Through in U.S. Manufacturing Industries," Working Papers 92-28, New York University, Leonard N. Stern School of Business, Department of Economics.
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  7. Linda Goldberg & Joseph Tracy, 1999. "Exchange rates and local labor markets," Staff Reports 63, Federal Reserve Bank of New York. [Downloadable!]
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  8. Davis, Steven J. & Haltiwanger, John, 1999. "Gross job flows," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 41, pages 2711-2805 Elsevier. [Downloadable!] (restricted)
  9. Nucci, Francesco & Pozzolo, Alberto F., 2001. "Investment and the exchange rate: An analysis with firm-level panel data," European Economic Review, Elsevier, vol. 45(2), pages 259-283, February. [Downloadable!] (restricted)
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This page was last updated on 2009-11-12.

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