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Adjusting to Globalization - Evidence from Worker-Establishment Matches in Germany

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  • Dauth, Wolfgang
  • Findeisen, Sebastian
  • Südekum, Jens

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.

Suggested Citation

  • Dauth, Wolfgang & Findeisen, Sebastian & Südekum, Jens, 2016. "Adjusting to Globalization - Evidence from Worker-Establishment Matches in Germany," CEPR Discussion Papers 11045, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:11045
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    Cited by:

    1. Hartung, Benjamin & Jung, Philip & Kuhn, Moritz, 2018. "What Hides behind the German Labor Market Miracle? Unemployment Insurance Reforms and Labor Market Dynamics," IZA Discussion Papers 12001, Institute of Labor Economics (IZA).
    2. Borrs, Linda & Knauth, Florian, 2016. "The impact of trade and technology on wage components," DICE Discussion Papers 241, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    3. Baumgarten, Daniel & Irlacher, Michael & Koch, Michael, 2020. "Offshoring and non-monotonic employment effects across industries in general equilibrium," European Economic Review, Elsevier, vol. 130(C).
    4. Nimczik, Jan Sebastian, 2017. "Job Mobility Networks and Endogenous Labor Markets," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168147, Verein für Socialpolitik / German Economic Association.
    5. Wolfgang Dauth & Sebastian Findeisen & Jens Suedekum, 2017. "Trade and Manufacturing Jobs in Germany," American Economic Review, American Economic Association, vol. 107(5), pages 337-342, May.
    6. Anna Goeddeke & Justus Haucap & Annika Herr & Christian Wey, 2018. "Flexibility in Wage Setting Under the Threat of Relocation," LABOUR, CEIS, vol. 32(1), pages 1-22, March.
    7. Bonnet, Céline & Schain, Jan Philip, 2017. "An empirical analysis of mergers: Efficiency gains and impact on consumer prices," DICE Discussion Papers 244, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    8. Sónia Cabral & Pedro S. Martins & João Pereira dos Santos & Mariana Tavares, 2021. "Collateral Damage? Labour Market Effects of Competing with China—at Home and Abroad," Economica, London School of Economics and Political Science, vol. 88(350), pages 570-600, April.
    9. Mertens, Matthias, 2020. "Labor market power and the distorting effects of international trade," International Journal of Industrial Organization, Elsevier, vol. 68(C).
    10. Dyballa, Katharina & Kraft, Kornelius, 2018. "Foreign Competition and Executive Compensation in the Manufacturing Industry: A Comparison between Germany and the U.S," IZA Discussion Papers 11713, Institute of Labor Economics (IZA).
    11. Dauth, Wolfgang & Findeisen, Sebastian & Südekum, Jens & Wößner, Nicole, 2017. "German robots - the impact of industrial robots on workers," IAB Discussion Paper 201730, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    12. Irlacher, Michael & Baumgarten, Daniel & Koch, Michael, 2017. "Short- versus long-run effects of offshoring when sectors are heterogeneous," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168272, Verein für Socialpolitik / German Economic Association.
    13. repec:iab:iabkbe:201715 is not listed on IDEAS
    14. Huber, Katrin & Winkler, Erwin, 2019. "All you need is love? Trade shocks, inequality, and risk sharing between partners," European Economic Review, Elsevier, vol. 111(C), pages 305-335.

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    More about this item

    Keywords

    endogenous worker mobility; Individual labour market responses; International trade; work biographies;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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