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

  • Pierre Biscourp

    (Crest)

  • Francis Kramarz

    (Crest)

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.

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Paper provided by Centre de Recherche en Economie et Statistique in its series Working Papers with number 2004-28.

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Date of creation: 2004
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Handle: RePEc:crs:wpaper:2004-28
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  1. 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.
  2. David Card & Francis Kramarz & Thomas Lemieux, 1996. "Changes in the Relative Structure of Wages and Employment: A Comparison of the United States, Canada, and France," NBER Working Papers 5487, National Bureau of Economic Research, Inc.
  3. Robert C. Feenstra & Gordon H. Hanson, 1995. "Foreign Investment, Outsourcing and Relative Wages," NBER Working Papers 5121, National Bureau of Economic Research, Inc.
  4. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February.
  5. Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
  6. Feenstra, Robert C & Hanson, Gordon H, 1996. "Globalization, Outsourcing, and Wage Inequality," American Economic Review, American Economic Association, vol. 86(2), pages 240-45, May.
  7. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
  8. Bernard, A.B. & Jensen, J.B., 1994. "Exporters, Skill Upgrading, and the Wage Gap," Working papers 94-30, Massachusetts Institute of Technology (MIT), Department of Economics.
  9. John M. Abowd & Francis Kramarz, 1997. "The Costs of Hiring and Separations," NBER Working Papers 6110, National Bureau of Economic Research, Inc.
  10. Kramarz, Francis & Philippon, Thomas, 2001. "The impact of differential payroll tax subsidies on minimum wage employment," Journal of Public Economics, Elsevier, vol. 82(1), pages 115-146, October.
  11. Revenga, Ana L, 1992. "Exporting Jobs? The Impact of Import Competition on Employment and Wages in U.S. Manufacturing," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 255-84, February.
  12. Venables, Anthony J., 1999. "Fragmentation and multinational production," European Economic Review, Elsevier, vol. 43(4-6), pages 935-945, April.
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