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Exporting and Labor Demand: Micro-Level Evidence from Germany

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  • Lichter, Andreas

    (Heinrich Heine University Düsseldorf)

  • Peichl, Andreas

    (Ludwig-Maximilians-Universität München)

  • Siegloch, Sebastian

    (University of Cologne)

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.

Suggested Citation

  • Lichter, Andreas & Peichl, Andreas & Siegloch, Sebastian, 2013. "Exporting and Labor Demand: Micro-Level Evidence from Germany," IZA Discussion Papers 7494, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp7494
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    6. Brändle, Tobias & Kalweit, René, 2016. "The Employment Effects of the EU Eastern Enlargement in Germany," VfS Annual Conference 2016 (Augsburg): Demographic Change 145502, Verein für Socialpolitik / German Economic Association.
    7. Lindenthal, Volker, 2018. "The Volatility and Cyclicality of Job Flows in German Exporters and Non-Exporters," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181637, Verein für Socialpolitik / German Economic Association.
    8. Yang Liang, 2021. "Job creation and job destruction: The effect of trade shocks on U.S. manufacturing employment," The World Economy, Wiley Blackwell, vol. 44(10), pages 2909-2949, October.
    9. Arnd Kölling & Antje Mertens, 2022. "Export activities and the demand for skills in German businesses," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 49(1), pages 189-223, February.
    10. Cox, Michael & Peichl, Andreas & Pestel, Nico & Siegloch, Sebastian, 2014. "Labor demand effects of rising electricity prices: Evidence for Germany," Energy Policy, Elsevier, vol. 75(C), pages 266-277.
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    More about this item

    Keywords

    export; labor demand; wage elasticity; microdata; trade; Germany;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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